Part 6Employment income: income which is not earnings or share-related

Chapter 3Payments and benefits on termination of employment etc.

Exceptions and reductions

409Exception for payments and benefits in respect of employee liabilities and indemnity insurance

1

This Chapter does not apply to a payment or other benefit received by an individual if or to the extent that—

a

in the case of a cash benefit, it is provided for meeting the cost of a deductible amount, or

b

in the case of a non-cash benefit, it is or represents a benefit equivalent to the cost of paying a deductible amount.

2

For the purposes of this section “deductible amount” means an amount which meets conditions A to C.

3

Condition A is that the amount is paid by the individual.

4

Condition B is that a deduction for the amount would have been allowed under section 346 from earnings from the relevant employment, if the individual still held the employment when the amount was paid.

5

Condition C is that the amount is paid at a time which falls within the run-off period.

6

In this section and section 410—

  • “relevant employment” means the employment mentioned in section 401(1);

  • “run-off period” means the period which—

    1. a

      starts with the day on which the relevant employment terminated, and

    2. b

      ends with the last day of the sixth tax year following the tax year in which the period started.