Source: All England Reporter
Publisher Citation: [2016] All ER (D) 87 (Mar)
Neutral Citation: [2016] UKSC 13
Court: Supreme Court

Lord Neuberger P, Lord Mance, Lord Reed, Lord Carnwath, Lord Hodge SCJJ

Representation Kevin Prosser QC (instructed by Pinsent Masons LLP) for UBS.
  David Goy QC and Nicola Shaw QC (instructed by Slaughter and May) for DB.
  Paul Lasok QC, Richard Vallat and Anneliese Blackwood (instructed by the General Counsel and Solicitor) for the Revenue and Customs Commissioners.
Judgment Dates: 9 March 2016


Income tax - Earnings from employment - Income and exemptions relating to securities - Securities acquired in connection with employment - Restricted securities - Taxpayer banks embarking on schemes to pay bonuses to employees - Schemes designed to avoid payment of income tax on those bonuses - Bonus sums being paid into scheme used to purchase interests in shares - Whether sums paid into scheme earnings of employees - Whether shares purchased as part of scheme constituting restricted securities - Whether scheme falling within exemption in relevant legislative provision - .

The Case

Income tax Earnings from employment. The Supreme Court allowed the appeal by the Revenue and Customs Commissioners concerning schemes used by UBS AG and DB Group Services (UK) Ltd, which were designed to avoid the payment of income tax on bankers' bonuses. The court held that the tax exemption in of the Income Tax (Earnings and Pensions) Act 2003, did not apply in the present case in respect of the schemes whereby shares were awarded to employees in place of bonuses. The court ruled that, on the true construction of s 423 and in the circumstances of the present case, income tax was payable on the value of the shares on the date of their acquisition.

Practice Areas

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