(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 F1... 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).
Textual Amendments
F1Word in s. 310(4) repealed (with effect in accordance with s. 18(5) of the amending Act) by Finance Act 2005 (c. 7), s. 18(2), Sch. 11 Pt. 2(1)