Income Tax (Earnings and Pensions) Act 2003

[F1 554G Exclusions: transactions under employee benefit packages U.K.

(1) Chapter 2 does not apply by reason of a relevant step taken by a person (“P”) if—

(a) the step is not taken under a pension scheme,

(b) the step is taken for the sole purpose of a transaction which P has with A and which P entered into in the ordinary course of P's business,

(c) if the step is the payment of a sum of money by way of a loan—

(i) a substantial proportion of P's business involves making similar loans to members of the public,

(ii) the transaction with A is part of a package of benefits which is available to a substantial proportion of B's employees, and

(iii) subsection (3) does not apply,

(d) if the step is not the payment of a sum of money by way of a loan, the transaction with A is part of a package of benefits which is available—

(i) to a substantial proportion of B's employees, or

(ii) to a substantial proportion of those employees of B whose status as employees of B is comparable with A's status as an employee of B (taking into account (for example) levels of seniority, types of duties and levels of remuneration),

(e) the terms on which similar transactions are offered by P under the package of benefits mentioned in paragraph (c)(ii) or (d) (as the case may be) are generous enough to enable substantially all of the employees of B to whom the package is available to take advantage of what is offered (if they want to),

(f) the terms on which P entered into the transaction with A are substantially the same as the terms on which P normally enters into similar transactions with employees of B under the package of benefits,

(g) if B is a company, a majority of B's employees to whom the package of benefits is available do not have a material interest (as defined in section 68) in B, and

(h) there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.

(2) For the purposes of subsection (1)(c)(i)—

(a) a loan is “similar” if it is made for the same or similar purposes as the loan which is the subject of the relevant step, and

(b) “members of the public” means members of the public at large with whom P deals at arm's length.

(3) This subsection applies if any feature of the package of benefits mentioned in subsection (1)(c)(ii) has or is likely to have the effect that, of the employees of B to whom the package is available, it is employees within subsection (4) on whom benefits under the package will be wholly or mainly conferred.

(4) The employees within this subsection are—

(a) directors,

(b) senior employees,

(c) employees who receive, or as a result of the package of benefits are likely to receive, the higher or highest levels of remuneration, and

(d) if B is a company and is a member of a group of companies, any employees not within paragraph (b) or (c) who—

(i) are senior employees in the group, or

(ii) receive, or as a result of the package of benefits are likely to receive, the higher or highest levels of remuneration in the group.

(5) For the purposes of subsection (1)(e) and (f) a transaction is “similar” if it is of the same or a similar type to the transaction which P has with A.

(6) If the relevant step is not the payment of a sum of money by way of a loan, in this section references to employees of B are references to those employees of B whose duties of employment are performed in the United Kingdom; and for this purpose duties performed outside the United Kingdom the performance of which is merely incidental to the performance of duties in the United Kingdom are to be treated as performed in the United Kingdom.

(7) In this section (apart from subsection (1)(d)(ii)) references to A include references to any person linked with A.

[F2 (8) See paragraph 29 of Schedule 11 to F(No. 2)A 2017 for provision about exclusions for transactions under employee benefit packages in a case in which the relevant step is within paragraph 1 of that Schedule.]]

Textual Amendments

F1 Pt. 7A inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 1

F2 S. 554G(8) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 30