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Preston Interest

'Preston' interest on pension arrears

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My client is in receipt of 'Preston' interest on arrears of pension awarded following a successful case against the Ministry of Justice. I believe the name is derived from Preston v Wolverhampton Healthcare NHS Trust (No.2) [2001] IRLR 237, HL , which related to the entitlement of part-time employees to pension rights. The interest paid on the arrears is intended to put claimants into a position 'no better and no worse off', and in Pettigrew v HMRC TC06473 it is stated that 'tax will not be paid on the interest on (the pension arrears). My question is - has anyone come across this kind of 'interest', and if so, is it regarded as being taxable, and if so, is theĀ  amount received treated as net of gross?

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By Tax Dragon
13th Feb 2020 12:29

How are purely generic technical questions ever sensitive?

Anyway.... yes, yes, gross.

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