371 Travel costs and expenses where duties performed abroad: visiting spouse’s , civil partner's or child’s travel
(1) A deduction is allowed from earnings which are relevant taxable earnings if—
(a) the earnings include an amount in respect of—
(i) the provision of travel facilities for a journey made by the employee’s spouse , civil partner or child, or
(ii) the reimbursement of expenses incurred by the employee on such a journey, and
(b) conditions A to C are met.
(2) The deduction is equal to the included amount.
(3) Condition A is that the employee is absent from the United Kingdom for a continuous period of at least 60 days for the purpose of performing the duties of one or more employments.
(4) Condition B is that the journey is between a place in the United Kingdom and a place outside the United Kingdom where such duties are performed.
(5) Condition C is that the employee’s spouse , civil partner or child is—
(a) accompanying the employee at the beginning of the period of absence,
(b) visiting the employee during that period, or
(c) returning to a place in the United Kingdom after so accompanying or visiting the employee.
(6) A deduction is not allowed under this section for more than two outward and two return journeys by the same person in a tax year.
(7) In this section “child” includes a stepchild and an illegitimate child, but not a person who is 18 or over at the beginning of the outward journey.
(8) In this section “relevant taxable earnings” has the meaning given by section 370(6).
For the purposes of—
(a) section 370 (employee’s travel costs and expenses where duties performed abroad), and
(b) section 371 (visiting spouse’s , civil partner's or child’s travel costs and expenses where duties performed abroad),
whether duties performed on a vessel are performed in or outside the United Kingdom is determined without regard to section 40(2) (certain duties treated as performed in UK).
373 Non-resident or qualifying new resident employee’s travel costs and expenses where duties performed in UK
(1) This section applies if a person (“the employee”) who is non-UK resident or a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act)—
(a) receives earnings from an employment for duties performed in the United Kingdom, and
(b) an amount is included in the earnings in respect of—
(i) the provision of travel facilities for a journey made by the employee, or
(ii) the reimbursement of expenses incurred by the employee on such a journey.
(2) A deduction is allowed from earnings from the employment which are earnings charged on receipt if the journey meets conditions A and B.
(3) Condition A is that the journey ends on, or during the period of 5 years beginning with, a date that is a qualifying arrival date in relation to the employee (see section 375).
(4) Condition B is that the journey is made—
(a) from a country outside the United Kingdom in which the employee normally lives at the time the journey is made to a place in the United Kingdom in order to perform duties of the employment, or
(b) to such a country from a place in the United Kingdom in order to return to such a country after performing such duties.
(5) If the journey is wholly for a purpose specified in subsection (4), the deduction is equal to the included amount.
(6) If the journey is only partly for such a purpose, the deduction is equal to so much of the included amount as is properly attributable to that purpose.
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
374 Non-resident or qualifying new resident employee’s spouse’s , civil partner's or child’s travel costs and expenses where duties performed in UK
(1) This section applies if a person (“the employee”) who is non-UK resident or a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act)—
(a) receives earnings from an employment for duties performed in the United Kingdom, and
(b) an amount is included in the earnings in respect of—
(i) the provision of travel facilities for a journey made by the employee’s spouse , civil partner or child, or
(ii) the reimbursement of expenses incurred by the employee on such a journey.
(2) A deduction is allowed from earnings from the employment which are earnings charged on receipt if conditions A to C are met.
(3) Condition A is that the journey—
(a) is made between a country outside the United Kingdom in which the employee normally lives at the time the journey is made and a place in the United Kingdom, and
(b) ends on, or during the period of 5 years beginning with, a date that is a qualifying arrival date in relation to the employee (see section 375).
(4) Condition B is that the employee is in the United Kingdom for a continuous period of at least 60 days for the purpose of performing the duties of one or more employments from which the employee receives earnings for duties performed in the United Kingdom.
(5) Condition C is that the employee’s spouse , civil partner or child is—
(a) accompanying the employee at the beginning of that period,
(b) visiting the employee during that period, or
(c) returning to a country outside the United Kingdom in which the employee normally lives at the time the journey is made, after so accompanying or visiting the employee.
(6) If the journey is wholly for the purpose of so accompanying or visiting the employee or so returning, the deduction is equal to the included amount.
(7) If the journey is only partly for that purpose, the deduction is equal to so much of the included amount as is properly attributable to that purpose.
(8) A deduction is not allowed under this section for more than two inward journeys and two return journeys by the same person in a tax year.
(9) In this section “child” includes a stepchild and an illegitimate child, but not a person who is 18 or over at the beginning of the inward journey.
(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) For the purposes of sections 373(3) and 374(3), a date is a qualifying arrival date in relation to a person if—
(a) it is a date on which the person arrives in the United Kingdom to perform duties of an employment from which the person receives earnings for duties performed in the United Kingdom, and
(b) condition A or B is met.
(2) Condition A is that the person has not been in the United Kingdom for any purpose during the period of 2 years ending with the day before the date.
(3) Condition B is that the person was not resident in the United Kingdom in either of the 2 tax years preceding the tax year in which the date falls.
(4) If, in a case where condition B applies, there are 2 or more dates in the tax year on which the person arrives in the United Kingdom to perform duties of an employment from which the person receives earnings for duties performed in the United Kingdom, the qualifying arrival date is the earliest of them.
376 Foreign accommodation and subsistence costs and expenses (overseas employments)
(1) A deduction from earnings from an employment is allowed if—
(a) the duties of the employment are performed wholly outside the United Kingdom,
(b) the employee is UK resident,
(c) in a case where the employer is a foreign employer, the employee is not a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act), and
(d) the earnings include an amount in respect of—
(i) the provision of accommodation or subsistence outside the United Kingdom for the employee for the purpose of enabling the employee to perform the duties of the employment, or
(ii) the reimbursement of expenses incurred by the employee on such accommodation or subsistence for that purpose.
(2) If the accommodation or subsistence is wholly for that purpose, the deduction is equal to the included amount.
(3) If the accommodation or subsistence is only partly for that purpose, the deduction is equal to so much of the included amount as is properly attributable to that purpose.
(4) Subsection (5) applies if in the tax year the employment is in substance one whose duties fall to be performed outside the United Kingdom.
(5) Duties of the employment performed in the United Kingdom, whose performance is merely incidental to the performance of duties outside the United Kingdom, are to be treated for the purposes of subsection (1)(a) as performed outside the United Kingdom.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
377 Costs and expenses in respect of personal security assets and services
(1) This section applies if—
(a) there is a special threat to an employee’s personal physical security which arises wholly or mainly because of the employee’s employment,
(b) an asset or service which improves personal security is provided for or used by the employee to meet the threat,
(c) the employee’s earnings include an amount in respect of—
(i) the provision or use, or
(ii) expenses connected with it,
because the whole or part of the cost of the provision or use is borne, or the expenses are reimbursed to the employee, by or on behalf of another person (“the provider”), and
(d) the provider’s sole object in bearing the whole or part of the cost or reimbursing the expenses is meeting the threat.
(2) In the case of such an asset, if the provider intends it to be used solely for the purpose of improving personal physical security, a deduction equal to the included amount is allowed.
(3) If the provider intends the asset to be used solely to improve personal physical security, any use of the asset incidental to that purpose is ignored.
(4) If the provider intends the asset to be used only partly to improve personal physical security, a deduction equal to the proportion of the included amount attributable to the intended use for that purpose is allowed.
(5) In determining whether or not this section applies in relation to an asset, it does not matter if—
(a) the asset becomes fixed to land (even a dwelling or grounds), or
(b) the employee is or becomes entitled—
(i) to the property in the asset, or
(ii) if the asset is a fixture, to any estate or interest in the land concerned.
(6) In the case of a service within subsection (1), if the benefit resulting to the employee consists wholly or mainly of an improvement of the employee’s personal physical security, a deduction equal to the included amount is allowed.
(7) The fact that an asset or a service improves the personal physical security of a member of the employee’s family or household, as well as that of the employee, does not prevent a deduction being allowed.
(8) In this section—
“asset” includes equipment or a structure (such as a wall), but not a car, ship or aircraft or a dwelling or grounds appurtenant to a dwelling, and
“service” does not include a dwelling or grounds appurtenant to a dwelling.
378 Deduction from seafarers' earnings: eligibility
(1) A deduction is allowed from earnings from an employment as a seafarer if—
(a) the earnings are relevant general earnings,
(b) the duties of the employment are performed wholly or partly outside the United Kingdom, and
(c) any of those duties are performed in the course of an eligible period.
(2) In this Chapter “eligible period” means a period consisting of at least 365 days which is either—
(a) a period of consecutive days of absence from the United Kingdom, or
(b) a combined period.
(3) A combined period is a period—
(a) at least half of the days in which are days of absence from the United Kingdom, and
(b) which consists of 3 consecutive periods, A, B and C, where—
A is a period of consecutive days of absence from the United Kingdom or a period which is itself a combined period,
B is a period of not more than 183 days, and
C is a period of consecutive days of absence from the United Kingdom.
(4) For this purpose a person is only regarded as being absent from the United Kingdom on any day if absent at the end of the day.
(5) Relevant general earnings” means—
(a) taxable earnings under section 15, 22 or 26, or
(b) general earnings—
(i) to which section 27 applies, and
(ii) which are for a period in which the employee is liable under the law of an EEA State (other than the United Kingdom) to tax in that State by reason of domicile or residence.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) The deduction under section 378—
(a) is allowed from the amount of the earnings from the employment attributable to the eligible period, and
(b) is equal to that amount.
(2) Earnings from the employment for a period of leave immediately after the eligible period are to be regarded as earnings attributable to the eligible period if or to the extent that they are earnings for the tax year in which the eligible period ends.
(3) This section is subject to section 380 (limit on deduction where UK duties etc. make amount unreasonable).
380 Limit on deduction where UK duties etc. make amount unreasonable
(1) If—
(a) section 378 (deduction from seafarers' earnings: eligibility) applies to earnings for a tax year, and
(b) in the tax year the employee performs some of the duties of the employment as a seafarer or of any associated employments in the United Kingdom,
the amount of earnings in respect of which the deduction under this Chapter is allowed is subject to the following limitation.
(2) The amount is restricted to the proportion of the aggregate earnings for that year from the employment as a seafarer and all associated employments that is reasonable having regard to—
(a) the nature of and time devoted to the duties performed outside and in the United Kingdom, and
(b) all other relevant circumstances.
(3) In this section “associated employments” means employments with the same employer or with associated employers.
(4) The same rules for determining whether employers are associated apply for the purposes of this section as apply for section 24(4) (limit on chargeable overseas earnings where duties of associated employment performed in UK) (see section 24(5)).
For the purposes of sections 379 and 380, the amount of the earnings from an employment for a tax year is the amount remaining after any deductions under—
(a) section 232 (giving effect to mileage allowance relief),
(b) Chapter 2, 3, 4 or 5 of this Part,
(c) section 262 of CAA 2001 (capital allowances to be given effect by treating them as deductions from earnings), and
(d) sections 188 to 194 of FA 2004 (contributions to registered pension schemes).
(1) Duties which a person performs on a ship engaged—
(a) on a voyage beginning or ending outside the United Kingdom (but excluding any part of it beginning and ending in the United Kingdom), or
(b) on a part beginning or ending outside the United Kingdom of any other voyage,
are treated as performed outside the United Kingdom for the purposes of this Chapter.
(2) Duties which a person performs on a vessel engaged on a voyage not extending to a port outside the United Kingdom are treated for the purposes of this Chapter as performed in the United Kingdom.
(3) For the purposes of subsection (1) the areas designated under section 1(7) of the Continental Shelf Act 1964 (c. 29) are treated as part of the United Kingdom.
(4) Subsection (1) applies despite anything to the contrary in section 40 (duties on board vessel or aircraft).
(1) For the purposes of section 378(1)(b) (deduction from seafarers' earnings: eligibility), duties of an employment as a seafarer which are performed outside the United Kingdom are treated as performed in the United Kingdom if conditions A and B are met.
(2) Condition A is that in the tax year in which the duties are performed the employment is in substance one whose duties fall to be performed in the United Kingdom.
(3) Condition B is that the performance of the duties performed outside the United Kingdom is merely incidental to the performance of duties in the United Kingdom.
(4) Section 39 (duties in UK merely incidental to duties outside UK) does not affect the question—
(a) where any duties are performed, or
(b) whether a person is absent from the United Kingdom,
for the purposes of section 378(1) to (3).
(1) In this Chapter employment “as a seafarer” means an employment (other than Crown employment) consisting of the performance of duties on a ship or of such duties and others incidental to them.
(2) In this section “Crown employment” means employment under the Crown—
(a) which is of a public nature,
(aa) which is not employment in the Royal Fleet Auxiliary Service, and
(b) the earnings from which are payable out of the public revenue of the United Kingdom or of Northern Ireland.
(1) In this Chapter “employer-financed retirement benefits scheme” means a scheme for the provision of benefits consisting of or including relevant benefits to or in respect of employees or former employees of an employer.
(2) But neither—
(a) a registered pension scheme, nor
(b) a section 615(3) scheme,
is an employer-financed retirement benefits scheme.
(3) “Section 615(3) scheme” means a superannuation fund to which section 615(3) of ICTA applies.
(4) “Scheme” includes a deed, agreement, series of agreements, or other arrangements.
(1) In this Chapter “relevant benefits” means any lump sum, gratuity or other benefit (including a non-cash benefit) provided (or to be provided)—
(a) on or in anticipation of the retirement of an employee or former employee,
(b) on the death of an employee or former employee,
(c) after the retirement or death of an employee or former employee in connection with past service,
(d) on or in anticipation of, or in connection with, any change in the nature of service of an employee, or
(e) to any person by virtue of a pension sharing order or provision relating to an employee or former employee.
(2) But—
(a) benefits charged to tax under Part 9 (pension income) , or that would be charged to tax under that Part but for section 573(2A) or (2B), 646D or 646E or any deductions under section 574A(3) ,
(b) benefits chargeable to tax by virtue of Schedule 34 to FA 2004 (which applies certain charges under Part 4 of that Act in relation to non-UK schemes), and
(c) excluded benefits,
are not relevant benefits.
(3) The following are “excluded benefits”—
(a) benefits in respect of ill-health or disablement of an employee during service,
(b) benefits in respect of the death by accident of an employee during service,
(c) benefits under a relevant life policy, and
(d) benefits of any description prescribed by regulations made by the Board of Inland Revenue.
(4) In subsection (3)(c) “relevant life policy” means—
(a) an excepted group life policy as defined in section 480 of ITTOIA 2005,
(b) a policy of life insurance the terms of which provide for the payment of benefits on the death of a single individual and with respect to which —
(i) condition A in section 481 of that Act would be met if paragraph (a) in that condition referred to the death, in any circumstances or except in specified circumstances, of that individual (rather than the death in any circumstances of each of the individuals insured under the policy) and if the condition did not include paragraph (b), and
(ii) conditions C and D in that section and conditions A and C in section 482 of that Act are met, or
(c) a policy of life insurance that would be within paragraph (a) or (b) but for the fact that it provides for a benefit which is an excluded benefit under or by virtue of paragraph (a), (b) or (d) of subsection (3).
(4A) Regulations under subsection (3)(d) may include provision having effect in relation to times before they are made.
(5) In subsection (1)(e) “pension sharing order or provision” means any such order or provision as is mentioned in section 28(1) of WRPA 1999 or Article 25(1) of WRP(NI)O 1999.
394 Charge on benefit to which this Chapter applies
(1) If a benefit to which this Chapter applies is received by an individual, the amount of the benefit counts as employment income of the individual for the relevant tax year.
(1A) Subsection (1) does not apply in relation to the benefit if the total amount of the benefits to which this Chapter applies received by the individual in the relevant tax year does not exceed £100.
(2) If a benefit to which this Chapter applies is received by a person who is not an individual, the person who is (or persons who are) the responsible person in relation to the scheme under which the benefit is provided is chargeable to income tax on the amount of the benefit for the relevant tax year.
(3) In this section the “relevant tax year” is the tax year in which the benefit is received.
(4) For the purposes of subsection (2), the rate of tax is 45% or such other rate as may for the time being be specified by the Treasury by order.
(4A) Subsection (4B) applies if the receipt of a benefit to which this Chapter applies gives rise to other relevant income of the employee, or the former employee, to or in respect of whom the benefit is provided.
(4B) Subsection (1) or (2) (as the case may be) applies to the amount of the benefit only so far as that amount exceeds the other relevant income.
(4C) In subsections (4A) and (4B) “other relevant income” means—
(a) general earnings of the employee or former employee which are chargeable to income tax,
(b) an amount which counts as employment income of the employee or former employee under Chapter 2 of Part 7A, ...
(ba) an amount which would count as employment income of the employee or former employee under that Chapter but for the application of section 554Z5 (overlap with earlier relevant step), or
(c) an amount which would be within paragraph (a), (b) or (ba) apart from—
(i) the employee or former employee having been non-UK resident for any tax year, or
(ii) any tax year having been a split year as respects the employee or former employee.
(5) No liability to income tax arises by virtue of any other provision of this Act in respect of a benefit to which this Chapter applies.
(6) Subsection (5) does not affect—
(a) any liability to income tax on general earnings, or
(b) any liability to income tax on an amount which counts as employment income under Chapter 2 of Part 7A.
(1) This section applies if an individual is temporarily non-resident.
(2) Any benefits within subsection (3) are to be treated for the purposes of section 394(1) as if they were received by the individual in the period of return.
(3) A benefit is within this subsection if—
(a) this Chapter applies to it,
(b) it is in the form of a lump sum,
(c) it is received by the individual in the temporary period of non-residence, and
(d) ignoring this section—
(i) no charge to tax arises by virtue of section 394(1) in respect of it, but
(ii) such a charge would arise if the existence of any double taxation relief arrangements were disregarded.
(4) Subsection (3)(d)(i) includes a case where the charge could be prevented by making a DTR claim, even if no claim is in fact made.
(5) Subsection (2) does not affect the operation of section 394(1A) (and, accordingly, “the relevant tax year” for the purposes of section 394(1A) remains the tax year in which the benefit is actually received).
(6) Nothing in any double taxation relief arrangements is to be read as preventing the individual from being chargeable to income tax in respect of any benefit treated by virtue of this section as received in the period of return (or as preventing a charge to that tax from arising as a result).
(7) Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains—
(a) when an individual is to be regarded as “temporarily non-resident”, and
(b) what “the temporary period of non-residence” and “the period of return” mean.
(8) In this section—
“double taxation relief arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010;
“DTR claim” means a claim for relief under section 6 of that Act.
(1) This section applies in relation to a relevant benefit under an employer-financed retirement benefits scheme in the form of a lump sum where, under the scheme, an employee has paid any sum or sums by way of contribution to the provision of the lump sum.
(2) The amount which, by virtue of section 394, counts as employment income, or is chargeable to tax under subsection (2) of that section, is the amount of the lump sum reduced by the sum, or the aggregate of the sums, paid by the employee by way of contribution to the provision of the lump sum.
(3) A reduction under this section may not be claimed in respect of the same contribution in relation to more than one lump sum.
(4) It is to be assumed, unless the contrary is shown, that no reduction is applicable under this section.
395A Benefits under old section 222 schemes not taxed by virtue of section 394
Section 394 does not apply to a benefit provided under an employer–financed retirement benefits scheme if—
(a) immediately before 6th April 1980 the scheme was approved under section 222 of ICTA 1970,
(b) the scheme was not approved under Chapter II of Part II of FA 1970,
(c) no material changes have been made to the terms on which benefits are provided under the scheme after 5th April 1980, and
(d) no contributions have been paid under the scheme after that date.
(1) This section applies if—
(a) a benefit to which this Chapter applies is provided to or in respect of an employee or former employee in the form of a lump sum,
(b) the employer-financed retirement benefits scheme under which the lump sum is provided is established in a country or territory outside the United Kingdom,
(c) the lump sum is received by the employee or former employee or a related person,
(ca) the recipient is not resident in the United Kingdom in the tax year in which the lump sum is received,
(d) all or part of the lump sum (“the relevant part”) would, but for this section, count as employment income by virtue of section 394(1) or be chargeable to income tax under section 394(2) (account having been taken of section 394(4B) and section 395), and
(e) the service in respect of which rights to receive the relevant part of the lump sum accrued (referred to as “reckonable service”) is or includes foreign service.
(2) Section 394(1) or, as the case may be, section 394(2) does not apply to the relevant part of the lump sum if the condition in subsection (3) is met.
(3) The condition is that—
(a) three-quarters or more of the period of reckonable service is made up of foreign service,
(b) if the period of reckonable service exceeds 10 years, the whole of the last 10 years of that period is made up of foreign service, or
(c) if the period of reckonable service exceeds 20 years, one-half or more of that period, including any 10 of the last 20 years, is made up of foreign service.
(4) If the condition in subsection (3) is not met, the amount that counts as employment income by virtue of section 394(1) or, as the case may be, is chargeable to income tax under section 394(2) is to be reduced by the appropriate proportion.
(5) The appropriate proportion is a proportion of the relevant part of the lump sum equal to the proportion that the period of foreign service included in the reckonable service bears to the period of reckonable service.
(6) In determining the service in respect of which rights to receive the relevant part of the lump sum accrued—
(a) service in a previous employment or with a previous employer is to be taken into account if rights to receive the relevant part of the lump sum also accrued in respect of that service, and
(b) it does not matter if the rights originally accrued under a different employer-financed retirement benefits scheme (whether one established in the United Kingdom or in a country or territory outside the United Kingdom).
(7) “Related person”, in relation to an employee or former employee (E), means any of the following—
(a) E’s spouse or civil partner or E’s widow or widower or surviving civil partner,
(b) a person who is financially dependent on E, whose financial relationship with E is one of mutual dependence or who is dependent on E because of physical or mental impairment (or, if the lump sum is paid after E’s death, anyone who was such a person at the time of E’s death), and
(c) E’s personal representatives.
(8) In this section “foreign service” has the meaning given by section 395C.
(1) In section 395B “foreign service” means service to which subsection (2), (3), (6) or (8) applies.
(2) This subsection applies to service in or after the tax year 2013–14—
(a) to the extent that it consists of duties performed outside the United Kingdom in respect of which earnings would not be relevant earnings, or
(b) if a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
(3) This subsection applies to service in or after the tax year 2003–04 but before the tax year 2013–14 such that—
(a) any earnings from the employment would not be relevant earnings, or
(b) a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
(4) In subsection (2) “relevant earnings” means—
(a) for service in or after the tax year 2025-26, earnings—
(i) to which section 15 applies, and
(ii) if the employee is a qualifying new resident for the purposes of Chapter 5C of Part 2 for that tax year, which are not qualifying foreign general earnings within the meaning of section 41T (qualifying foreign general earnings), and
(b) for service before tax year 2025-26, earnings to which section 15 applies and to which that section would apply even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year.
(5) In subsection (3) “relevant earnings” means—
(a) for service in or after the tax year 2008–09, earnings—
(i) which are for a tax year in which the employee is ordinarily UK resident,
(ii) to which section 15 applies, and
(iii) to which that section would apply even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year, and
(b) for service before the tax year 2008–09, general earnings to which section 15 or 21 as originally enacted applies.
(6) This subsection applies to service before the tax year 2003–04 and after the tax year 1973–74 such that—
(a) the emoluments from the employment were not chargeable under Case I of Schedule E, or would not have been so chargeable had there been any, or
(b) a deduction equal to the whole amount of the emoluments from the employment was or would have been allowable under a foreign earnings deduction provision.
(7) In subsection (6) “foreign earnings deduction provision” means—
(a) paragraph 1 of Schedule 2 to FA 1974,
(b) paragraph 1 of Schedule 7 to FA 1977, or
(c) section 192A or 193(1) of ICTA.
(8) This subsection applies to service before the tax year 1974-75 such that tax was not chargeable in respect of the emoluments of the employment—
(a) in the tax year 1956–57 or later, under Case I of Schedule E, or
(b) in earlier tax years, under Schedule E,
or it would not have been so chargeable had there been any such emoluments.
(1) In the case of a cash benefit, for the purposes of this Chapter the amount of a benefit is taken to be the amount received.
(2) In the case of a non-cash benefit, for the purposes of this Chapter the amount of a benefit is taken to be the greater of—
(a) the amount of earnings (as defined in Chapter 1 of Part 3) that the benefit would give rise to if it were received for performance of the duties of an employment (money’s worth), and
(b) the cash equivalent of the benefit under the benefits code if it were so received and the code applied to it.
(3) For the purposes of subsection (2) the benefits code has effect with the modifications in subsections (4) to (6).
(4) References in the benefits code to the employee are to be taken as references to the person by whom the benefit is received.
(5) References in the benefits code to the employer are to be taken as including references to the former employer.
(6) Where—
(a) section 106 (cash equivalent: cost of accommodation over £75,000) applies, and
(b) the amount referred to in section 105(2)(b) (the sum made good) exceeds the amount referred to in section 105(2)(a) (the rental value),
the amount to be subtracted under paragraph (b) of step 4 of the calculation in section 106(2) is that excess (and not only the excess rent referred to there).
399 Employment-related loans: interest treated as paid
(1) This section applies if—
(a) an amount consisting of, or including, an amount representing the benefit of a loan (“a taxable amount”) counts as employment income of an individual in a tax year under section 394(1), or
(b) the person who is (or any of the persons who are) the responsible person in relation to a scheme is charged to tax on a taxable amount ... under section 394(2).
(2) The individual or the responsible person is to be treated for all purposes of the Tax Acts (other than this Chapter) as having paid interest on the loan in the tax year equal to the amount representing the cash equivalent of the loan.
(3) The interest is to be treated—
(a) as accruing during the period in the tax year during which the loan is outstanding, and
(b) as paid at the end of the period.
(4) The interest is not to be treated—
(a) as income of the person making the loan, or
(b) as relevant loan interest to which section 369 of ICTA applies (mortgage interest payable under deduction of tax).
(1) The following heads specify the person who is, or persons who are, the responsible person in relation to an employer-financed retirement benefits scheme for the purposes of this Chapter.
(2) But if a person is, or persons are, the responsible person in relation to the scheme by virtue of being specified under one head, no-one is the responsible person in relation to the scheme by virtue of being specified under a later head.
Head 1
If there are one or more trustees of the scheme who are resident in the United Kingdom, that trustee or each of those trustees.
Head 2
If there are one or more persons who control the management of the scheme, that person or each of those persons.
Head 3
If alive or still in existence, the employer, or any of the employers, who established the scheme and any person by whom that employer, or any of those employers, has been directly or indirectly succeeded in relation to the provision of benefits under the scheme.
Head 4
Any employer of employees to or in respect of whom benefits are, or are to be, provided under the scheme.
Head 5
If there are one or more trustees of the scheme who are not resident in the United Kingdom, that trustee or each of those trustees.
In this Chapter—
“employer-financed retirement benefits scheme” has the meaning given by section 393A;
“relevant benefits” has the meaning given by section 393B; and
“responsible person” has the meaning given by section 399A.
(1) This Chapter applies to payments and other benefits which are received directly or indirectly in consideration or in consequence of, or otherwise in connection with—
(a) the termination of a person’s employment,
(b) a change in the duties of a person’s employment, or
(c) a change in the earnings from a person’s employment,
by the person, or the person’s spouse or civil partner, blood relative, dependant or personal representatives.
(2) Subsection (1) is subject to subsection (3) and sections 405 to 414A (exceptions for certain payments and benefits).
(3) This Chapter does not apply to any payment or other benefit chargeable to income tax apart from this Chapter.
(4) For the purposes of this Chapter—
(a) a payment or other benefit which is provided on behalf of, or to the order of, the employee or former employee is treated as received by the employee or former employee, and
(b) in relation to a payment or other benefit—
(i) any reference to the employee or former employee is to the person mentioned in subsection (1), and
(ii) any reference to the employer or former employer is to be read accordingly.
(1) In this Chapter “benefit” includes anything in respect of which, were it received for performance of the duties of the employment, an amount—
(a) would be taxable earnings from the employment, or
(b) would be such earnings apart from an earnings-only exemption.
This is subject to subsections (2) to (4).
(2) In this Chapter “benefit” does not include a benefit received in connection with the termination of a person’s employment that is a benefit which, were it received for performance of the duties of the employment, would fall within—
(a) section 239(4) (exemption of benefits connected with taxable cars and vans and exempt heavy goods vehicles), so far as that section applies to a benefit connected with a car or van,
(b) section 269 (exemption where benefits or money obtained in connection with taxable car or van or exempt heavy goods vehicle),
(c) section 319 (mobile telephones), or
(d) section 320 (limited exemption for computer equipment).
(3) In this Chapter “benefit” does not include a benefit received in connection with any change in the duties of, or earnings from, a person’s employment to the extent that it is a benefit which, were it received for performance of the duties of the employment, would fall within section 271(1) (limited exemption of removal benefits and expenses).
(4) The right to receive a payment or benefit is not itself a benefit for the purposes of this Chapter.
402A Split of payments and other benefits between sections 402B and 403
(1) In this Chapter “termination award” means a payment or other benefit to which this Chapter applies because of section 401(1)(a).
(2) Section 402B (termination awards not benefiting from threshold treated as earnings) applies to termination awards to the extent determined under section 402C.
(3) Section 403 (charge on payment or benefit where threshold applies) applies to termination awards so far as they are not ones to which section 402B applies.
(4) Section 403 also applies to payments and other benefits to which this Chapter applies because of section 401(1)(b) or (c) (change in duties or earnings).
402B Termination awards not benefiting from threshold to be treated as earnings
(1) The amount of a termination award to which this section applies—
(a) is treated as an amount of earnings of the employee, or former employee, from the employment ,...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) See also section 7(3)(b) and (5)(ca) (which cause amounts treated as earnings under this section to be included in general earnings).
(3) Section 403(3) (when benefits are received) does not apply in relation to payments or other benefits to which this section applies.
402C The termination awards to which section 402B applies
(1) This section has effect for the purpose of identifying the extent to which section 402B applies to termination awards in respect of the termination of the employment of the employee.
(2) In this section “relevant termination award” means a termination award that is neither—
(a) a redundancy payment, nor
(b) so much of an approved contractual payment as is equal to or less than the amount which would have been due if a redundancy payment had been payable.
(3) If the post-employment notice pay (see section 402D) in respect of the termination is greater than, or equal to, the total amount of the relevant termination awards in respect of the termination, section 402B applies to all of those relevant termination awards.
(4) If the post-employment notice pay in respect of the termination is less than the total amount of the relevant termination awards in respect of the termination but is not nil—
(a) section 402B applies to a part of those relevant termination awards, and
(b) the amount of that part is equal to the post-employment notice pay.
(5) Section 309(4) to (6) (meaning of “redundancy payment” and “approved contractual payment” etc) apply for the purposes of subsection (2) as they apply for the purposes of section 309.
(1) “The post-employment notice pay” in respect of a termination is (subject to subsection (11)) given by—
( BP × D P ) − T
where—
BP, D and P are given by subsections (3) to (7), and
T is the total of the amounts of any payment or benefit received in connection with the termination which—
would fall within section 401(1)(a) but for section 401(3),
is taxable as earnings under Chapter 1 of Part 3,
is not pay in respect of holiday entitlement for a period before the employment ends, and
is not a bonus payable for termination of the employment.
(2) If the amount given by the formula in subsection (1) is a negative amount, the post-employment notice pay is nil.
(3) Subject to subsections (5) , (6) and (6A)—
BP is the employee's basic pay (see subsection (7)) from the employment in respect of the last pay period of the employee to end before the trigger date,
P is the number of days in that pay period, and
D is the number of days in the post-employment notice period.
(4) See section 402E for the meaning of “trigger date” and “post-employment notice period”.
(5) If there is no pay period of the employee which ends before the trigger date then—
BP is the employee's basic pay from the employment in respect of the period starting with the first day of the employment and ending with the trigger date,
P is the number of days in that period, and
D is the number of days in the post-employment notice period.
(6) If the last pay period of the employee to end before the trigger date is a month, the employee's basic pay is paid in equal monthly instalments, the minimum notice (see section 402E) is given by contractual terms and is expressed to be a whole number of months, and the post-employment notice period is equal in length to the minimum notice or is otherwise a whole number of months, then—
BP is the employee's basic pay from the employment in respect of the last pay period of the employee to end before the trigger date,
P is 1, and
D is the length of the post-employment notice period expressed in months.
(6A) In any other case where the last pay period of the employee to end before the trigger date is a month and the employee's basic pay is paid in equal monthly instalments, then—
BP is the employee's basic pay from the employment in respect of the last pay period of the employee to end before the trigger date,
P is 30.42, and
D is the number of days in the post-employment notice period.
(7) In this section “basic pay” means—
(a) employment income of the employee from the employment but disregarding—
(i) any amount received by way of overtime, bonus, commission, gratuity or allowance,
(ii) any amount received in connection with the termination of the employment,
(iii) any amount treated as earnings under Chapters 2 to 10 of Part 3 (the benefits code) or which would be so treated apart from section 64,
(iv) any amount which is treated as earnings under Chapter 12 of Part 3 (amounts treated as earnings),
(v) any amount which counts as employment income by virtue of Part 7 (income relating to securities and securities options), and
(vi) any employment-related securities that constitute earnings under Chapter 1 of Part 3 (earnings), and
(b) any amount which the employee has given up the right to receive but which would have fallen within paragraph (a) had the employee not done so.
(8) In subsection (7) “employment-related securities” has the same meaning as it has in Chapter 1 of Part 7 (see section 421B).
(9) The Treasury may by regulations amend this section for the purpose of altering the meaning of “basic pay”.
(10) A statutory instrument containing regulations under subsection (9) may not be made unless a draft of it has been laid before, and approved by a resolution of, the House of Commons.
(11) Where the purpose, or one of the purposes, of any arrangements is the avoidance of tax by causing the post-employment notice pay calculated under subsection (1) to be less than it would otherwise be, the post-employment notice pay is to be treated as the amount which the post-employment notice pay would have been but for the arrangements.
(12) In subsection (11) “arrangements” includes any scheme, arrangement or understanding of any kind, whether or not legally enforceable, involving a single transaction or two or more transactions.
402E Meaning of “trigger date” and “post-employment notice period” in section 402D
(1) Subsections (2) and (4) to (6) have effect for the purposes of section 402D (and subsection (4) has effect also for the purposes of this section).
(2) The “trigger date” is—
(a) if the termination is not a notice case, the last day of the employment, and
(b) if the termination is a notice case, the day the notice is given.
(3) For the purposes of this section, the termination is a “notice case” if the employer or employee gives notice to the other to terminate the employment, and here it does not matter—
(a) whether the notice is more or less than, or the same as, the minimum notice, or
(b) if the employment ends before the notice expires.
(4) The “minimum notice” is the minimum notice required to be given by the employer to terminate the employee's employment by notice in accordance with the law and contractual terms effective—
(a) where the termination is not a notice case—
(i) immediately before the employment ends, or
(ii) where the employment ends by agreement entered into after the start of the employment, immediately before the agreement is entered into, and
(b) where the termination is a notice case, immediately before the notice is given.
(5) The “post-employment notice period” is the period—
(a) beginning at the end of the last day of the employment, and
(b) ending with the earliest lawful termination date.
(But see subsection (8) for provision about limited-term contracts.)
(6) If the earliest lawful termination date is, or precedes, the last day of the employment, the number of days in the post-employment notice period is nil.
(7) “The earliest lawful termination date” is the last day of the period which—
(a) is equal in length to the minimum notice, and
(b) begins at the end of the trigger date.
(8) In the case of a contract of employment which is a limited-term contract and which does not include provision for termination by notice by the employer, the post-employment notice period is the period—
(a) beginning at the end of the last day of the employment, and
(b) ending with the day of the occurrence of the limiting event.
(9) If, in a case to which subsection (8) applies, on the last day of the employment the day of the occurrence of the limiting event is not ascertained or ascertainable (because, for example, the limiting event is the performance of a task), then subsection (8) has effect as if for paragraph (b) there were substituted—
(b) ending with the day on which notice would have expired if the employer had, on the last day of the employment, given to the employee the minimum notice required to terminate the contract under section 86 of the Employment Rights Act 1996 (assuming that that section applies to the employment).
(10) In this section “limited-term contract” and “limiting event” have the same meaning as in the Employment Rights Act 1996 (see section 235(2A) and (2B)).
403 Charge on payment or other benefit where threshold applies
(1) The amount of a payment or benefit to which this section applies counts as employment income of the employee or former employee for the relevant tax year if and to the extent that it exceeds the £30,000 threshold.
(2) In this section “the relevant tax year” means the tax year in which the payment or other benefit is received.
(3) For the purposes of this Chapter (but see section 402B(3)) —
(a) a cash benefit is treated as received—
(i) when it is paid or a payment is made on account of it, or
(ii) when the recipient becomes entitled to require payment of or on account of it, and
(b) a non-cash benefit is treated as received when it is used or enjoyed.
(4) For the purposes of this Chapter the amount of a payment or benefit in respect of an employee or former employee exceeds the £30,000 threshold if and to the extent that, when aggregated with—
(a) other payments or benefits in respect of the employee or former employee that are payments or benefits to which this section applies, and
(b) other payments or benefits in respect of the employee or former employee that are payments or benefits—
(i) received in the tax year 2017-18 or an earlier tax year, and
(ii) to which this Chapter applied in the tax year of receipt,
it exceeds £30,000 according to the rules in section 404 (how the £30,000 threshold applies).
(5) If it is received after the death of the employee or former employee—
(a) the amount of a payment or benefit to which this section applies counts as the employment income of the personal representatives for the relevant year if or to the extent that it exceeds £30,000 according to the rules in section 404, and
(b) the tax is accordingly to be assessed and charged on them and is a debt due from and payable out of the estate.
(6) In this Chapter references to the taxable person are to the person in relation to whom subsection (1) or (5) provides for an amount to count as employment income or, as the case may be, in relation to whom section 402B(1) provides for an amount to be treated as an amount of earnings .
(1) For the purpose of the £30,000 threshold in section 403(4) and (5), the payments and other benefits provided in respect of an employee or former employee which are to be aggregated are those provided—
(a) in respect of the same employment,
(b) in respect of different employments with the same employer, and
(c) in respect of employments with employers who are associated.
(2) For this purpose employers are “associated” if on a termination or change date—
(a) one of them is under the control of the other, or
(b) one of them is under the control of a third person who on that termination or change date or another such date controls or is under the control of the other.
(3) In subsection (2)—
(a) references to an employer, or to a person controlling or controlled by an employer, include the successors of the employer or person, and
(b) “termination or change date” means a date on which a termination or change occurs in connection with which a payment or other benefit to which section 403 applies is received in respect of the employee or former employee.
(4) If payments and other benefits are received in different tax years, the £30,000 is set against the amount of payments and other benefits received in earlier years before those received in later years.
(5) If more than one payment or other benefit is received in a tax year in which the threshold is exceeded—
(a) the £30,000 (or the balance of it) is set against the amounts of cash benefits as they are received, and
(b) any balance at the end of the year is set against the aggregate amount of non-cash benefits received in the year.
(6) In subsection (3)(b), the reference to a payment or other benefit to which section 403 applies includes a reference to a payment or other benefit—
(a) received in the tax year 2017-18 or an earlier tax year, and
(b) to which this Chapter applied in the tax year of receipt.
404A Amounts charged to be treated as highest part of total income
(1) A payment or other benefit which counts as a person's employment income as a result of section 403 is treated as the highest part of the person's total income.
(2) Subsection (1) has effect for all income tax purposes except the purposes of sections 535 to 537 of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief).
(3) See section 1012 of ITA 2007 (relationship between highest part rules) for the relationship between—
(a) the rule in subsection (1), and
(b) other rules requiring particular income to be treated as the highest part of a person's total income.