Income Tax (Trading and Other Income) Act 2005

[F1782CVolunteers etc: compensation for lost employment incomeU.K.
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(1)No liability to income tax arises in respect of a payment by a relevant authority to a person if—

(a)the person performs services for the authority for no financial benefit in a period in which he or she is also employed,

(b)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), and

(c)the person does not perform the services as the holder of an office with the authority (as to which, see section 299A of ITEPA 2003).

(2)For the purposes of subsection (1) a person performs services for no financial benefit 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 performing the services,

(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 in respect of reasonable expenses incurred in performing the services,

(b)a payment compensating the person for loss of social security income arising as a result of performing the services, and

(c)a payment to which subsection (1) applies.

(4)In subsection (1)(b) “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 performed the services, 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 this section—

  • “employment” has the meaning given by section 4 of ITEPA 2003;

  • “relevant authority” has the meaning given by section 299A of ITEPA 2003;

  • “services” includes services as a juror;

  • “social security income” has the meaning given by section 657 of ITEPA 2003.]

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