Jurisdiction(s):
United Kingdom

Saunders v HMRC: UT holds SARs taxable on realisation; Abbott v Philbin distinguished; split-year rules do not exclude charge; payment attributed to UK employment despite non-residence

Published on: 11 November 2025

Published by a LexisNexis Tax expert

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Article summary

Saunders v HMRC [2025] UKUT 374 (TCC)

The Hibernia group engaged the taxpayer in the UK from 2008 to 2016, and he lived in the UK for the whole of that employment without interruption. In April 2013, the group granted him SARs at a stated price under the plan. On vesting, the SARs gave him a right to a cash amount if at least 43% of the shares in the group’s parent company were sold. That amount was computed by the uplift in the shares’ value from grant to sale on that basis. Approximately half of his SARs vested immediately, with the balance vesting in three equal tranches in July 2013, July 2014 and July 2015 respectively. He left Hibernia’s employment on 31 July 2016 and thereafter became non-UK resident the next day. The group was subsequently sold and, in January 2017, Hibernia paid him £1.2m in respect of the SARs, net of PAYE income tax and NICs. He reclaimed the amounts withheld via his self-assessment return. After opening an enquiry, HMRC amended the return, classifying the payment as taxable earnings from employment. The FTT rejected his appeal against that decision, and he subsequently appealed to the UT...

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