295 Transport and subsistence for Government ministers etc.
(1) No liability to income tax arises in respect of the provision of transport or subsistence provided or made available by or on behalf of the Crown to—
(a) the holder of a ministerial office, or
(b) a member of the family or household of the holder of a ministerial office.
(2) No liability to income tax arises in respect of payments and reimbursements by or on behalf of the Crown of expenses incurred in connection with the provision of transport or subsistence to a person within subsection (1).
(3) “Ministerial office” means—
(a) an office in Her Majesty’s Government in the United Kingdom,
(b) any other office which is one of the offices and positions in respect of which salaries are payable under section 1 of the Ministerial and other Salaries Act 1975 (c. 27), and
(c) an office under one of the following Acts which corresponds to an office within paragraph (a) or (b)—
(i) the Scotland Act 1998 (c. 46),
(ii) the Government of Wales Act 2006, or
(iii) the Northern Ireland Act 1998 (c. 47).
(4) In determining whether a particular person holds an office within subsection (3)(b), it is irrelevant whether or not a salary is paid or payable to that person under the Ministerial and other Salaries Act 1975.
(5) In this section references to the provision of transport to a person include references to—
(a) the provision or making available to that person of a vehicle with or without a driver,
(b) the provision of fuel for a vehicle provided or made available to that person, and
(c) the provision of any other benefit in connection with such a vehicle.
(6) In this section—
(a) “subsistence” includes food and drink and temporary living accommodation, and
(b) “vehicle” means a mechanically propelled road vehicle.
295A Travel expenses of members of local authorities etc
(1) No liability to income tax arises in respect of a qualifying payment made to a member of a relevant authority for travel expenses incurred by the member if—
(a) the payment is for expenses other than those related to the member's use of a vehicle to which Chapter 2 applies, and
(b) the expenses are not excluded by subsection (2).
(2) Expenses are excluded by this subsection if—
(a) they are incurred on a journey between the member's home and permanent workplace, and
(b) the member's home is situated more than 20 miles outside the boundary of the area of the relevant authority.
(3) In this section “permanent workplace” has the same meaning as in Part 5 (see section 339).
(4) The Treasury may by regulations—
(a) provide for bodies specified in the regulations (which must be local authorities or bodies that have similar or related functions or purposes) to be relevant authorities for the purposes of this section,
(b) provide for references in this section to a member of a relevant authority to be read as references to a member of a description prescribed in the regulations, and
(c) define what is meant by “qualifying payment” for the purposes of this section.
(5) The regulations may contain transitional provision and savings.
(1) No liability to income tax arises in respect of—
(a) the provision of travel facilities for a member of the armed forces of the Crown going on or returning from leave, or
(b) a payment made in respect of such travel.
(2) In subsection (1) “travel facilities” does not include a vehicle.
(1) No liability to income tax arises in respect of allowances if—
(a) they are payable out of the public revenue to any description of members of the armed forces of the Crown, and
(b) the Treasury certifies that they are payable to them instead of food or drink normally supplied to members of the armed forces.
(2) No liability to income tax arises in respect of allowances if—
(a) they are payable out of the public revenue in respect of any description of members of the armed forces of the Crown, and
(b) the Treasury certifies that they are so payable as a contribution to the expenses of a mess.
(1) No liability to income tax arises in respect of payments to members of the armed forces of the Crown of the Operational Allowance.
(2) The Operational Allowance is an allowance designated as such under a Royal Warrant made under section 333 of the Armed Forces Act 2006 .
(1) No liability to income tax arises in respect of payments of the Council Tax Relief to members of the armed forces of the Crown.
(2) Payments of the Council Tax Relief are payments designated as such under a Royal Warrant made under section 333 of the Armed Forces Act 2006 .
297C Armed forces: Continuity of Education Allowance
(1) No liability to income tax arises in respect of payments of the Continuity of Education Allowance to or in respect of members of the armed forces of the Crown during their employment under the Crown or after their deaths.
(2) The Continuity of Education Allowance is an allowance designated as such under a Royal Warrant made under section 333 of the Armed Forces Act 2006.
(1) No liability to income tax arises in respect of payments of accommodation allowances to, or in respect of, a member of the armed forces of the Crown.
(2) An “accommodation allowance” is an allowance—
(a) payable out of the public revenue,
(b) for, or towards, costs of accommodation, and
(c) in respect of which any conditions specified in regulations made by the Treasury are met.
(3) The provision that may be made by regulations under subsection (2)(c) includes provision framed by reference to a scheme (by whatever name called), or document, as it has effect from time to time.
(4) Regulations under this section may make—
(a) different provision for different cases, and
(b) different provision for different areas.
(5) Regulations under this section that do not increase any person's liability to income tax may have effect in relation to times before they are made.
298 Reserve and auxiliary forces' training allowances
No liability to income tax arises in respect of the following sums if they are payable out of the public revenue to members of the reserve and auxiliary forces of the Crown—
(a) training expenses allowances, and
(b) bounties payable in consideration of the members undertaking certain training and attaining a particular standard of efficiency.
(1) No liability to income tax arises in respect of an allowance paid to a person in employment under the Crown if it is certified to represent compensation for the extra cost of being obliged to live outside the United Kingdom in order to perform the duties of the employment.
(2) A certificate under subsection (1) may only be given by—
(a) the Treasury,
(b) the Secretary of State,
(c) the Lord Chancellor,
(d) the Chancellor of the Exchequer,
(e) the Minister for the Civil Service,
(f) the Lord President of the Council,
(g) the Lord Privy Seal, or
(h) the Attorney General.
299A Voluntary office-holders: compensation for lost employment income
(1) No liability to income tax arises in respect of a payment made by a relevant authority to a person if—
(a) the person holds a voluntary office with the authority,
(b) the person carries out duties of the office in a period in which he or she is also employed, and
(c) the payment is made solely to compensate the person for lost employment income for the period (and accordingly does not exceed the amount of that income).
(2) For the purposes of subsection (1) a person holds a voluntary office if, at the time the payment referred to in that subsection is made, the person—
(a) is not entitled to any payment or benefit in connection with carrying out the duties of the office,
(b) has not received any such payment or benefit, and
(c) does not expect to receive any such payment or benefit.
(3) For the purposes of subsection (2)(a), (b) and (c) disregard—
(a) a payment (whether an advance payment or a reimbursement) in respect of reasonable expenses incurred in carrying out the duties of the office, and
(b) a payment to which subsection (1) or section 16A of ITTOIA 2005 applies.
(4) In subsection (1)(c) “lost employment income” means the difference between—
(a) the amount of employment income, after deduction of tax and national insurance contributions, that the person would have received from the employment for the period if he or she had not carried out the duties of the office, and
(b) the amount of employment income, after deduction of tax and national insurance contributions, that the person did receive from the employment for the period.
(5) In subsection (1) “relevant authority” means any of the following—
Government
A government department
The Welsh Ministers and the Counsel General to the Welsh Government
The Scottish Ministers
The holder of an office in the Scottish Administration which, for the purposes of the Scotland Act 1998, is not a ministerial office (see section 126(8) of that Act)
A Northern Ireland department
Local government
A county, district or parish council in England
The council of a London borough
The Common Council of the City of London
The Greater London Authority
The Council of the Isles of Scilly
A county, county borough or community council in Wales
A council constituted under section 2 of the Local Government etc. (Scotland) Act 1994 or community council in Scotland
A district council in Northern Ireland
Trade unions
An organisation the name of which is entered in the list maintained by the Certification Officer under section 2 of the Trade Union and Labour Relations (Consolidation) Act 1992
An organisation the name of which is entered in the list maintained by the Certification Officer for Northern Ireland under Article 5 of the Industrial Relations (Northern Ireland) Order 1992 (S.I. 1992/807 (N.I. 5))
Local medical committees
A Local Medical Committee (see section 97(4) of the National Health Service Act 2006)
Other public bodies
A body (other than a company) that is established by or under a statutory provision for the purpose of carrying out functions conferred on it by or under a statutory provision.
(6) In this section—
“company” means a company as defined by section 1 of the Companies Act 2006;
references to a relevant authority include a company the activities of which consist solely of carrying out some or all of the functions of that authority, otherwise than for profit;
“statutory provision” includes any provision made by or under an Act of Parliament, an Act of the Scottish Parliament, any Northern Ireland legislation, or any Act or Measure of the National Assembly for Wales.
(7) Section 16A of ITTOIA 2005 (voluntary office-holders: compensation for lost profits) contains equivalent provision for holders of a voluntary office who carry on a trade, profession or vocation.
299B Voluntary office-holders: payments in respect of expenses
(1) No liability to income tax arises in respect of a payment to a person who holds a voluntary office if the payment is in respect of reasonable expenses incurred in carrying out the duties of that office.
(2) It does not matter whether—
(a) the payment is an advance payment or a reimbursement;
(b) the person who makes the payment is the person with whom the office is held.
(3) Subsections (2) and (3) of section 299A apply for the purposes of subsection (1) of this section as they apply for the purposes of subsection (1) of that section.
(1) No liability to income tax arises in respect of income arising from the office of a consul in the United Kingdom in the service of a foreign state.
(2) Such income is also to be disregarded in estimating the amount of income for any income tax purposes.
(3) In this section “consul” means a person recognised by Her Majesty as being a consul-general, consul, vice-consul or consular agent.
(1) No liability to income tax arises in respect of income arising from employment as an official agent in the United Kingdom for a foreign state if conditions A and B are met.
(2) Condition A is that the employee is neither—
(a) a Commonwealth citizen, nor
(b) a citizen of the Republic of Ireland.
(3) Condition B is that the functions of the employment are not exercised in connection with a trade, business or other undertaking carried on for the purposes of profit.
(4) Such income is also to be disregarded in estimating the amount of income for any income tax purposes.
(5) In this section “official agent” means a person who is not a consul (as defined in section 300) but is employed on the staff of—
(a) a consulate, or
(b) an official department or agency of a foreign state.
(6) Subsection (5)(b) does not apply to a department or agency which carries on a trade, business or other undertaking for the purposes of profit.
(1) No liability to income tax arises in respect of income arising from employment in the United Kingdom as a consular employee for a foreign state if—
(a) Her Majesty by Order in Council directs that this section applies to the foreign state for the purpose of giving effect to a reciprocal arrangement with that state, and
(b) condition A or B is met.
(2) Condition A is that the employee is a national of the foreign state.
(3) Condition B is that the employee is not a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen.
(4) In this section—
“consular employee” includes any person employed for the purposes of the official business of a consular officer at—
any consulate,
any consular establishment, or
any other premises used for those purposes, and
“reciprocal arrangement” means a consular convention or other arrangement with a foreign state, making similar provision to that made by this section , sections 646A and 681A of this Act and section 771 of ITTOIA 2005 (relevant foreign income of consular officers and employees) in the case of Her Majesty’s consular officers or employees in that state.
(5) An Order in Council under subsection (1) may limit the operation of this section in relation to a state in any way appearing to Her Majesty necessary or expedient having regard to the arrangement with the state.
(6) Such an Order—
(a) may be made so as to have effect from a date earlier than that on which it is made, but not earlier than the arrangement in question comes into force, and
(b) may contain such transitional provisions as appear to Her Majesty necessary or expedient.
(7) A statutory instrument containing such an Order is subject to annulment in pursuance of a resolution of the House of Commons.
(8) This section does not affect section 301 (official agents).
(1) No liability to income tax arises in respect of earnings if—
(a) they are paid by the government of a designated country to a member of a visiting force of that country or of a civilian component of such a force, and
(b) that person is not a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen.
(2) For the purposes of subsection (1)—
(a) members of the armed forces of a designated country who are attached to a designated international military headquarters are treated as a visiting force of that country, and
(b) whether a person is a member of a civilian component of such a force is to be determined accordingly.
(3) No liability to income tax arises in respect of earnings if they are paid by a designated allied headquarters to an employee of a category for the time being agreed between Her Majesty’s government in the United Kingdom and the other members of the North Atlantic Council.
(4) But where the employee is a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen, subsection (3) only applies if it is necessary for it to do so to give effect to an agreement between parties to the North Atlantic Treaty.
(4A) No liability to income tax arises in respect of earnings if—
(a) they are paid by the government of a designated country to a person belonging to the EU civilian staff, and
(b) that person is not a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen.
(5) Subsections (1) and (2) are to be interpreted as if—
(a) they were in Part 1 of the Visiting Forces Act 1952 (c. 67), and
(b) references in that Act to a country to which a provision of that Act applies were references to a designated country.
(6) In this section—
“allied headquarters” means an international military headquarters established under the North Atlantic Treaty, ...
“designated” means designated for the purpose in question by or under an Order in Council made for giving effect to an international agreement, and
“ the EU civilian staff ” means designated for the purpose in question by or under an Order in Council made for giving effect to an international agreement.
civilian personnel seconded by a member State to an EU institution for the purposes of activities (including exercises) relating to the preparation for, and execution of, tasks mentioned in Article 43(1) of the Treaty on European Union (tasks relating to a common security and defence policy), as amended from time to time, and
civilian personnel (other than locally hired personnel)—
made available to the EU by a member State to work with designated international military headquarters or a force of a designated country, or
otherwise made available to the EU by a member State for the purposes of activities of the kind referred to in paragraph (a).
(1) No liability to income tax arises in respect of daily subsistence allowances paid by the European Commission to persons whose services are made available to the Commission by their employers under the detached national experts scheme.
(2) “The detached national experts scheme” means—
(a) the scheme relating to national experts seconded to the European Commission which was established by the Commission on 26th July 1988, as it has effect for the time being, or
(b) any scheme having effect for the time being which replaces that scheme.
304A Experts seconded to other European Union bodies
(1) No liability to income tax arises in respect of any subsistence allowances paid by a relevant EU body to persons who, because of their expertise in matters relating to the subject matter of the functions of the relevant EU body, have been seconded to the body by their employers.
(2) Each of the following is a “relevant EU body”—
(a) the European Medicines Agency, established as the European Agency for the Evaluation of Medicinal Products by Council Regulation (EEC) No 2309/93 of 22 July 1993,
(b) the European Police College, established by Council Decision of 20 September 2005 (2005/681/JHA),
(c) the European Banking Authority, established by Regulation (EU) No 1093/2010 of 24 November 2010, and
(d) any other body established by an EU instrument which is designated as a relevant EU body for the purposes of this section by an order made by the Treasury.
305 Offshore oil and gas workers: mainland transfers
(1) No liability to income tax arises in respect of—
(a) the provision for an employee who has a permanent workplace at an offshore installation of—
(i) transfer transport,
(ii) related accommodation and subsistence, or
(iii) local transport, or
(b) the payment or reimbursement of reasonable expenses incurred by such an employee on such transport or accommodation and subsistence.
(2) Subsection (1)(a)(ii) only applies if the related accommodation and subsistence is provided at reasonable cost.
(3) In this section “transfer transport” means transport by sea or air between the mainland of Great Britain or Northern Ireland and the offshore installation, which meets conditions A and B.
(4) Condition A is that the place of arrival or departure on the mainland is one to or from which transport between the mainland and the offshore installation is provided for employees generally.
(5) Condition B is that the cost of the transport would not be deductible under Part 5 if the employee incurred and paid it.
(6) In this section—
“related accommodation and subsistence” means overnight accommodation and subsistence in the vicinity of the place of departure or arrival on the mainland, which is necessary because of the time at which transfer transport is to be taken,
“local transport” means transport between a place where the employee is provided with related accommodation and subsistence and the place of departure or arrival on the mainland,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“workplace” and “permanent workplace” have the meaning given by section 339.
306 Miners etc: coal and allowances in lieu of coal
(1) No liability to income tax arises in respect of the provision of coal or smokeless fuel or an allowance paid in lieu of such provision if the employee is a colliery worker and the condition in subsection (2) is met.
(2) That condition is that the amount of coal or fuel provided or in respect of which the allowance is paid does not substantially exceed the amount reasonably required for personal use.
(3) That condition is assumed to be met unless the contrary is shown.
(4) In this section “colliery worker” means a coal miner or any other person employed at or about a colliery otherwise than in clerical, administrative or technical work.
(1) For the purposes of this section an individual is employed as a home care worker if the duties of the employment consist wholly or mainly of the provision of personal care to another individual (“the recipient”) at the recipient's home, in a case where the recipient is in need of personal care because of—
(a) old age,
(b) mental or physical disability,
(c) past or present dependence on alcohol or drugs,
(d) past or present illness, or
(e) past or present mental disorder.
(2) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the provision of board or lodging (or both) to an individual employed as a home care worker if the provision is—
(a) on a reasonable scale,
(b) at the recipient's home, and
(c) by reason of the individual's employment as a home care worker.
306B Limited exemption for sporting testimonial payments
(1) This section applies to any sporting testimonial payments which are—
(a) made out of money raised by a sporting testimonial (“the sporting testimonial”), and
(b) treated by virtue of section 226E as earnings of a person (“S”).
(2) No liability to income tax arises in respect of sporting testimonial payments to which this section applies.
(3) Subsection (2) has effect subject to and in accordance with the following provisions.
(4) It only applies—
(a) if the controller of the relevant event or activity (or of all the relevant events or activities in a series) constituting the sporting testimonial is an independent person,
(b) if S has not already benefitted from an exemption under this section in relation to one or more sporting testimonial payments made out of money raised by another sporting testimonial, and
(c) where the sporting testimonial consists of a series of relevant events or activities taking place over more than a year, if the sporting testimonial payment is made out of money raised by events or activities taking place within the period of one year beginning with the day on which the first event or activity in the series took place.
(5) It only applies to the first £100,000 of sporting testimonial payments made out of money raised by the sporting testimonial.
(6) If sporting testimonial payments are made (out of money raised by the sporting testimonial) in two or more tax years, any part of the exempt amount that is not used in the first of those years is to be carried forward to the next tax year (and so on).
(7) This section applies to sporting testimonial payments made to or to the order of the personal representatives of S (where S has died) but only if the payments are made within the period of 24 months beginning with the date of death.
(8) In subsection (4)(a) “independent person” means a person who is not (or where the controller is a committee, a committee none of whose members are)—
(a) S or a person connected with S,
(b) an employer or former employer of S or a person connected with an employer or former employer of S, or
(c) a person acting for or on behalf of a person mentioned in paragraph (a) or (b).
(9) If the first relevant event or activity in a series took place before 6 April 2017, subsection (4)(c) has effect as if it referred to the year beginning with 6 April 2017.
(10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect for the purposes of this section.
(11) Terms used in this section and section 226E have the same meaning as in that section.
(1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of provision made by an employee’s employer under a registered pension scheme or otherwise for a retirement or death benefit.
(1A) Subsection (1) does not apply to provision made for insuring against the risk that a retirement or death benefit under an employer-financed retirement benefits scheme cannot be paid or given because of the employer’s insolvency.
(1B) In subsection (1A) “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A).
(2) In this section “retirement or death benefit” means a pension, annuity, lump sum, gratuity or other similar benefit which will be paid or given to the employee , or paid or given in respect of the employee to any other individual or to a charity, in the event of the employee’s retirement or death.
308 Exemption of contributions to registered pension scheme
No liability to income tax arises in respect of earnings where an employee’s employer makes contributions under a registered pension scheme in respect of the employee.
308A Exemption of contributions to overseas pension scheme
(1) No liability to income tax arises in respect of earnings where an employer makes contributions under a qualifying overseas pension scheme in respect of an employee who is a relevant migrant member of the pension scheme.
(2) In subsection (1)—
“qualifying overseas pension scheme”, and
“relevant migrant member”,
have the same meaning as in Schedule 33 to FA 2004 (overseas pension schemes: migrant member relief).
308B Independent advice in respect of conversions and transfers of pension scheme benefits
(1) No liability to income tax arises in respect of—
(a) the provision to an employee or former employee of appropriate independent advice, or
(b) the payment or reimbursement, to or in respect of an employee or former employee, of the cost of such advice,
if conditions A to C are met.
(2) Condition A is that the provision, payment or reimbursement is required by regulations under section 49 or 52 of the Pension Schemes Act 2015 (power to require employer to arrange independent advice in respect of conversions and transfers).
(3) If condition A is met only as respects part of the payment or reimbursement because the amount of the payment or reimbursement exceeds the amount required to be paid or reimbursed, subsection (1) applies in respect of that part.
(4) Condition B is that the provision, payment or reimbursement is not pursuant to relevant salary sacrifice arrangements.
(5) Condition C is that such other requirements as may be specified in regulations made by the Treasury are satisfied in relation to the provision, payment or reimbursement.
(6) In this section—
“appropriate independent advice”—
in relation to England and Wales and Scotland, has the meaning given by regulations under section 48 of the Pension Schemes Act 2015;
in relation to Northern Ireland, has the meaning given by regulations under section 51 of that Act;
“relevant salary sacrifice arrangements” means arrangements (whenever made, whether before or after the employment began) under which an employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of appropriate independent advice or the payment or reimbursement of the cost of such advice.
308C Provision of pensions advice: limited exemption
(1) No liability to income tax arises in respect of—
(a) the provision of relevant pensions advice to an employee or former or prospective employee, or
(b) the payment or reimbursement of costs incurred, by or in respect of an employee or former or prospective employee, in obtaining relevant pensions advice,
if Condition A or B is met.
(2) But subsection (1) does not apply in relation to a person in a tax year so far as the value of the exemption in the person's case in that year exceeds £500.
(3) The “value of the exemption”, in relation to a person and a tax year, is the amount exempted by subsection (1) from income tax in the person's case in that year, disregarding subsection (2) for this purpose.
(4) If in a tax year there is in relation to an individual more than one person who is an employer or former employer, subsections (1) to (3) apply in relation to the individual as employee or former or prospective employee of any one of those persons separately from their application in relation to the individual as employee or former or prospective employee of any other of those persons.
(5) “Relevant pensions advice”, in relation to a person, means information, or advice, in connection with—
(a) the person's pension arrangements, or
(b) the use of the person's pension funds.
(6) Condition A is that the relevant pensions advice, or payment or reimbursement, is provided under a scheme that is open—
(a) to the employer's employees generally, or
(b) generally to the employer's employees at a particular location.
(7) Condition B is that the relevant pensions advice, or payment or reimbursement, is provided under a scheme that is open generally to the employer's employees, or generally to those of the employer's employees at a particular location, who—
(a) have reached the minimum qualifying age, or
(b) meet the ill-health condition.
(8) The “minimum qualifying age”, in relation to an employee, means the employee's relevant pension age less 5 years.
(9) “Relevant pension age”, in relation to an employee, means—
(a) if any of paragraphs 22, 23, 23ZB or 23ZC of Schedule 36 to FA 2004 apply in relation to the employee, the lowest protected pension age that applies as a result of those paragraphs (in relation to the employee or, as the case may be, to sums or assets that relate to the employee), or
(b) in any other case, the employee's normal minimum pension age, as defined by section 279(1) of FA 2004.
(10) The “ill-health condition” is met by an employee if the employer is satisfied, on the basis of evidence provided by a registered medical practitioner, that the employee is (and will continue to be) incapable of carrying on his or her occupation because of physical or mental impairment.
309 Limited exemptions for statutory redundancy payments
(1) No liability to income tax in respect of earnings arises by virtue of a redundancy payment or an approved contractual payment, except where subsection (2) applies.
(2) Where an approved contractual payment exceeds the amount which would have been due if a redundancy payment had been payable, the excess is liable to income tax.
(3) No liability to income tax in respect of employment income other than earnings arises by virtue of a redundancy payment or an approved contractual payment, except where it does so by virtue of Chapter 3 of Part 6 (payments and benefits on termination of employment etc.).
(4) For the purposes of this section—
(a) a statutory payment in respect of a redundancy payment is to be treated as paid on account of the redundancy payment, and
(b) a statutory payment in respect of an approved contractual payment is to be treated as paid on account of the approved contractual payment.
(5) In this section—
“approved contractual payment” means a payment to a person on the termination of the person’s employment under an agreement in respect of which an order is in force under section 157 of ERA 1996 or Article 192 of ER(NI)O 1996,
“redundancy payment” means a redundancy payment under Part 11 of ERA 1996 or Part 12 of ER(NI)O 1996, and
“statutory payment” means a payment under section 167(1) of ERA 1996 or Article 202(1) of ER(NI)O 1996.
(6) In subsection (5) “employment”, in relation to a person, has the meaning given in section 230(5) of ERA 1996 or Article 3(5) of ER(NI)O 1996.
(1) No liability to income tax arises in respect of—
(a) the provision of services to a person in connection with the cessation of the person’s employment, or
(b) the payment or reimbursement of—
(i) fees for such provision, or
(ii) travelling expenses incurred in connection with such provision,
if conditions A to D and, in the case of travel expenses, condition E are met.
(2) Condition A is that the only or main purpose of the provision of the services is to enable the person to do either or both of the following—
(a) to adjust to the cessation of the employment, or
(b) to find other gainful employment (including self-employment).
(3) Condition B is that the services consist wholly of any or all of the following—
(a) giving advice and guidance,
(b) imparting or improving skills,
(c) providing or making available the use of office equipment or similar facilities.
(4) Condition C is that the person has been employed ... in the employment which is ceasing throughout the period of 2 years ending—
(a) at the time when the services begin to be provided, or
(b) if earlier, at the time when the employment ceases.
(5) Condition D is that the opportunity to receive the services, on similar terms as to payment or reimbursement of any expenses incurred in connection with their provision, is available—
(a) generally to employees or former employees of the person’s employer in that employment, or
(b) to a particular class or classes of them.
(6) Condition E is that the travel expenses are expenses—
(a) in respect of which, on the assumptions in subsection (7), mileage allowance relief under Chapter 2 of this Part would be available if no mileage allowance payments had been made, or
(b) which, on those assumptions, would be deductible under Part 5.
(7) The assumptions are—
(a) that receiving the services is one of the duties of the employee’s employment,
(b) that the employee incurs and pays the expenses, and
(c) if the employment has in fact ceased, that it continues.
(8) In this section “mileage allowance payments” has the meaning given by section 229(2).
(1) No liability to income tax arises in respect of the payment or reimbursement of retraining course expenses by a person (“the employer”) if the course conditions, the employment conditions and, in the case of travel expenses, the conditions in subsection (5) are met.
(2) In subsection (1) “retraining course expenses” means—
(a) fees for the attendance of another person (“the employee”) at a training course,
(b) travelling expenses incurred in connection with it,
(c) fees for an examination taken during or at the end of it, or
(d) the cost of any books which are essential for a person attending it.
(3) The course conditions are that—
(a) the course provides training designed to impart or improve skills or knowledge relevant to, and intended to be used in the course of, gainful employment (including self-employment) of any description,
(b) it is entirely devoted to the teaching or practical application (or both) of the skills or knowledge, and
(c) it lasts no more than two years. ...
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) The employment conditions are that—
(a) the employee begins the course while employed by the employer or within the period of one year after the employment ceases,
(b) the employee ceases to be employed by the employer before the end of the period of 2 years beginning at the end of the course and is not re-employed by the employer within the period of 2 years after so ceasing,
(c) the employee is employed ... in the employment which is ceasing throughout the period of 2 years ending—
(i) when the employee begins the course, or
(ii) if earlier, when the employment ceases, and
(d) the opportunity to undertake the course, on similar terms as to payment or reimbursement of amounts within subsection (1), is available—
(i) generally to the employee’s fellow employees or former fellow employees in that employment, or
(ii) to a particular class or classes of them.
(5) The travel expenses must be—
(a) expenses in respect of which, on the assumptions in subsection (6), mileage allowance relief under Chapter 2 of this Part would be available if no mileage allowance payments had been made, or
(b) expenses which, on those assumptions, would be deductible under Part 5.
(6) The assumptions are—
(a) that attendance at the course is one of the duties of the employee’s employment,
(b) that the employee incurs and pays the expenses, and
(c) if the employee has in fact ceased to be employed by the employer, that the employee continues to be employed by the employer.
(7) In this section “mileage allowance payments” has the meaning given by section 229(2).
(1) This section applies if—
(a) a person’s liability to tax for a tax year has been determined on the assumption that section 311(1) applies, and
(b) subsequently—
(i) the condition in section 311(4)(a) is not met because of the person’s failure to begin the course within the period of one year after ceasing to be employed, or
(ii) the condition in section 311(4)(b) is not met because of the person’s continued employment or re-employment.
(2) An assessment of an amount or further amount of tax due as a result of the condition not being met may be made under section 29(1) of TMA 1970.
(3) Such an assessment must be made before the end of the period of 6 years immediately following the end of the tax year in which subsection (1) first applies.
(4) If subsection (1)(b)(i) or (ii) applies, the person’s employer or former employer must give an officer of Revenue and Customs a notice containing particulars of the person’s failure to begin the course or continued employment or re-employment within 60 days of coming to know of it.
(5) If an officer of Revenue and Customs has reason to believe that a person has failed to give such a notice, the officer may by notice require the person to provide such information as the officer may reasonably require for the purposes of this section about—
(a) the failure to begin the course,
(b) the continued employment, or
(c) the re-employment.
(6) A notice under subsection (5) may specify a time (not less than 60 days) within which the required information must be provided.
312A Limited exemption for qualifying bonus payments
(1) This section applies in relation to qualifying bonus payments made, in a tax year (“the tax year”), by an employer which is a company to an employee or former employee of the employer.
(2) No liability to income tax arises in respect of the qualifying bonus payments if, or to the extent that, the total chargeable amount in respect of those payments does not exceed £3,600 (“the exempt amount”).
(3) If qualifying bonus payments are made to the same person by two or more employers in the tax year, subsection (2) applies separately in relation to the total payments made by each employer, unless subsection (4) applies.
(4) If two or more employers are members of the same group at the time each of them first makes a qualifying bonus payment to the employee or former employee in the tax year, subsection (2) applies as if the reference to the qualifying bonus payments were to all the qualifying bonus payments made by those employers to the employee or former employee in that tax year.
(5) If, in a tax year—
(a) an employer makes a payment when it is a member of a group, and
(b) later in that tax year the employer ceases to be a member of that group,
the employer is treated for the purposes of this section as remaining a member of that group for the remainder of the tax year (without prejudice to it also being a member of any other group).
(6) In applying subsection (2)—
(a) the exempt amount is set against payments in the order in which they are made, and
(b) if two or more payments are made on the same day, which together take the total payments made in the tax year over the exempt amount, subsection (7) applies to determine the amount of each of those payments which is exempt.
(7) In a case within subsection (6)(b), the amount of a payment which is exempt is given by the formula—
P SP × REA
where—
P is the amount of the payment,
SP is the sum of that payment and the other payments made on the same day, and
REA is so much of the exempt amount as remains after taking account of any qualifying bonus payments previously made in the tax year.
(8) Where subsection (2) applies separately to different payments by virtue of subsection (3), subsections (6) and (7) also apply to those payments separately.
(9) The Treasury may by order increase or reduce the sum of money specified in subsection (2).
(10) A statutory instrument containing an order under this section which reduces the sum of money specified may not be made unless a draft of it has been laid before and approved by a resolution of the House of Commons.
(11) In this section “chargeable amount”, in respect of a qualifying bonus payment, means the amount of employment income which would be charged to tax in respect of that qualifying bonus payment, apart from this section.
(1) A payment made by an employer (“E”) to an employee or former employee is a qualifying bonus payment if—
(a) it does not consist of regular salary or wages,
(b) it is awarded under a scheme which meets the participation requirement and the equality requirement (see section 312C),
(c) E meets the trading requirement (see section 312D) throughout the qualifying period,
(d) E meets the indirect employee-ownership requirement (see section 312E) throughout the qualifying period,
(e) E meets the office-holder requirement (see section 312F) at the time the payment is made and on at least the requisite number of days in the qualifying period (whether or not those days are consecutive),
(f) E is not a service company (see section 312G),
(g) the payment is not excluded (see section 312H), and
(h) where it is a payment to a former employee, it is made in the period of 12 months beginning with the day the employment ceased.
(2) In this section “the qualifying period”, in relation to a payment, means the period of 12 months ending with the day on which the payment is made.
(3) But in a case where E meets the indirect employee-ownership requirement on the day on which the payment is made—
(a) if the controlling interest requirement was first met during that 12 month period, the qualifying period does not include any time before it was met, and
(b) if the all-employee benefit requirement was first met during that 12 month period, the qualifying period does not include any time before that requirement was met.
(4) In this section “the requisite number of days” means—
(a) if the qualifying period is 12 months, the number of days in that period reduced by 90, and
(b) if the qualifying period is a shorter period by virtue of subsection (3), the number of days in that period reduced by the corresponding fraction of 90 days.
312C Section 312B: the participation and equality requirements
(1) For the purposes of section 312B—
(a) the participation requirement is that all persons in relevant employment when the award is determined must be eligible to participate in that and any other award under the scheme, and
(b) the equality requirement is that every employee who participates in an award under the scheme must do so on the same terms.
(2) A person is in “relevant employment” if—
(a) where E is a member of a group, the person is employed by any company which is a member of the group, and
(b) in any other case, the person is employed by E.
(2A) The participation requirement is not infringed by reason of the exclusion of directors of the company from participating in an award.
(3) The participation requirement is not infringed by reason of a person in relevant employment being excluded from participating in an award because, at the time the award is determined, the person has less than the minimum period of continuous service in relevant employment required by E.
But the minimum period required by E for this purpose must not exceed 12 months.
(4) The participation requirement is not infringed—
(a) by reason of a person being excluded from participating in an award where—
(i) disciplinary proceedings have been taken against the person by E which have resulted in a finding of gross misconduct against the person, and
(ii) that finding was made in the period of 12 months immediately before the time the award is determined,
(b) by reason of a person's eligibility to participate in an award being conditional, in a case where the person is at the time of the award subject to disciplinary proceedings taken by E, upon those proceedings being concluded and no finding of gross misconduct being made against that person, or
(c) by a person being treated as never having been eligible to participate in an award where, after the award was made but before the payment is made—
(i) a finding of gross misconduct is made against that person in disciplinary proceedings taken by E after the award was made, or
(ii) that person is summarily dismissed from the employment.
(5) The equality requirement is infringed if the amount of an award to an employee under the scheme is determined by reference to factors other than those mentioned in subsection (6).
(6) The equality requirement is not infringed by reason of the amount of an award under the scheme to employees participating in the award being determined by reference to—
(a) an employee's remuneration,
(b) an employee's length of service, or
(c) hours worked by an employee;
but this is subject to subsections (7) and (8).
(7) The equality requirement is infringed if an award is made on terms such that some (but not all) of the employees participating in the award receive nothing.
(8) If the amount of an award is determined by reference to more than one of the factors mentioned in subsection (6), the equality requirement is infringed unless—
(a) each factor gives rise to a separate entitlement related to the level of remuneration, length of service or (as the case may be) hours worked, and
(b) the total entitlement is the sum of those separate entitlements.
(9) Subject to subsection (6), the equality requirement is infringed if any feature of the scheme has, or is likely to have, the effect of conferring benefits wholly or mainly on those participating in the award who are—
(a) directors or former directors, or
(b) employees receiving the higher or highest levels of remuneration, or
(c) employees who—
(i) are employed in a particular part of the business carried on by E or, if E is a member of a group, the group, or
(ii) carry on particular kinds of activities.
(10) In subsections (1)(b), (5), (6), (7) and (9) references to an employee include a former employee, so, when applying those subsections in relation to a former employee, any reference to remuneration, length of service, hours worked, being employed in a particular part of a business or carrying on particular activities is to be read as relating to that former employment.
(1) For the purposes of section 312B, a company meets the trading requirement if—
(a) it is a trading company which is not a member of a group, or
(b) it is a member of a trading group.
(2) “Trading company” means a company carrying on trading activities whose activities do not include to a substantial extent activities other than trading activities.
(3) “Trading group” means a group—
(a) one or more of whose members carry on trading group activities, and
(b) the activities of whose members, taken together, do not include to a substantial extent activities other than trading group activities.
(4) In this section—
“trading activities” means activities carried on by the company in the course of, or for the purposes of, a trade being carried on by it;
“trading group activities” means activities carried on by a member of the group in the course of, or for the purposes of, a trade being carried on by any member of the group.
(5) For the purposes of determining whether a company is a trading company or a member of a trading group—
(a) the activities of the members of a group are to be treated as one business (with the result that activities are disregarded to the extent that they are intra-group activities), and
(b) a business carried on by a company in partnership with one or more other persons is to be treated as not being a trading activity.
312E Section 312B: the indirect employee-ownership requirement
(1) For the purposes of section 312B, a company meets the indirect employee-ownership requirement if—
(a) a settlement meets the controlling interest requirement in respect of—
(i) the company, or
(ii) if the company is a member of a trading group, but not the principal company, that principal company, and
(b) the settlement meets the all-employee benefit requirement.
(2) For this purpose—
(a) section 236M of TCGA 1992 applies to determine if a settlement meets the controlling interest requirement in respect of the company mentioned in subsection (1)(a)(i) or (ii) (as the case may be), and
(b) sections 236J and 236K of that Act apply to determine if the settlement meets the all-employee benefit requirement (but see subsection (3)).
(3) If a settlement would not otherwise meet the all-employee benefit requirement at any time during the qualifying period, section 236L of TCGA 1992 applies for the purposes of subsection (1)(b), unless the all-employee benefit requirement has (ignoring that section) previously been met at any time in the period—
(a) beginning with 10 December 2013, and
(b) ending immediately before that time.
(4) For the purposes of subsections (2) and (3)—
(a) in sections 236I to 236M of TCGA 1992 references to C are to be read as references to the company in respect of which the settlement is required to meet the controlling interest requirement (see subsection (1)(a)), and
(b) section 236L of that Act applies as if the reference in subsection (1)(c) of that section to the period of 12 months ending with the time in question were a reference to the period of 12 months ending with the date the payment is made (even if the qualifying period is a period of less than 12 months by virtue of section 312B(3)).
(1) For the purposes of section 312B, a company meets the officer-holder requirement if the appropriate fraction does not exceed 2/5.
(2) “The appropriate fraction” means—
ND NE
where—
ND is the number of persons who are one or both of the following—
a director or other office-holder of the company;
an employee of the company connected with a person within paragraph (a);
NE is the number of persons who are employees (or office-holders) of the company.
(1) For the purposes of section 312B, “service company” means—
(a) a managed service company within the meaning of section 61B, or
(b) a company (“SC”) in respect of which Conditions A and B are met.
(2) Condition A is that the business carried on by SC consists substantially of the provision of the services of persons employed by it.
(3) Condition B is that the majority of those services are provided to persons—
(a) to whom subsection (4) applies, but
(b) who are not members of the same group as the company which makes the payment.
(4) This subsection applies to—
(a) a person who controls or has controlled, or two or more persons who together control or have controlled, SC or any company of which SC is a 51% subsidiary at the time the payment is made,
(b) a person who, or two or more persons who together, at any time before the time the payment is made—
(i) employed all or a majority of the employees of SC, or
(ii) employed all or a majority of the employees of SC and other companies which are members of the same group as SC at the time the payment is made (taken together), and
(c) any company which is a 51% subsidiary of, controlled by or connected or associated with, any person within paragraph (a) or (b).
(5) For the purposes of subsection (4)—
(a) a partnership is to be treated as a single person, and
(b) where a partner (alone or together with others) has control of a company, the partnership is to be treated as having (in the same way) control of that company.
(6) The following provisions apply for the purposes of this section—
(a) section 449 of CTA 2010 (“associated company”);
(b) section 995 of ITA 2007 (meaning of “control”);
(c) section 286 of TCGA 1992 (connected persons: interpretation).
(1) For the purposes of section 312B, a payment is “excluded” if the employee is a party to arrangements (whether made before or after the beginning of the employee's employment) under which—
(a) the employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of the payment, or
(b) the employee and employer agree that the employee is to receive the payment rather than receive some other description of employment income.
(2) In this section references to an employee include a former employee.
(1) In this Chapter—
“company” has the meaning given by section 170(9) of TCGA 1992;
“trade” means any trade which is conducted on a commercial basis and with a view to the realisation of profits.
(2) In this Chapter—
(a) references to a group, to membership of a group, to the principal company of a group or to being members of the same group, are to be construed in accordance with section 170 of TCGA 1992, and
(b) references to a group are to be construed with any necessary modifications where applied to a company incorporated under the law of a country or territory outside the United Kingdom.
(3) For the purposes of this Chapter, a payment is treated as made when it would be treated as received for the purposes of Chapter 4 of Part 2 if it were not a qualifying bonus payment (see section 18).
(4) In this Chapter references to a payment to an employee or former employee include a payment to the personal representatives of an employee or former employee who has died if the payment is made within the period of 12 months beginning with the date of death.