(b) a person falling within subsection (5) has a right to receive, or any
expectation of receiving, a further lump sum or further lump sums
under the scheme on a further disposal of any part of the asset or a
further surrender of any part of or share in any rights in the asset.
(5) The persons referred to in subsection (4)(b) are—
(a) the employee,
(b) a relative of that employee,
(c) the personal representatives of that employee, or
(d) any person connected with that employee.
(6) The formula referred to in subsection (4) is—
D is the deduction applicable;
S is the aggregate amount of any sum or sums of a description mentioned
in paragraphs (a) and (b) of subsection (3);
LS is the amount of the lump sum received in relation to which the
deduction applicable falls to be determined;
MVA is the market value of the asset in relation to which the disposal or
surrender occurred, on the assumption that the valuation is made
immediately before the disposal or surrender.
(7) An individual may not claim that a deduction is applicable in relation to a
lump sum more than once.
(8) For the purposes of this section it must be assumed that, unless the contrary is
(a) the income and gains accruing to the scheme are not brought into
charge to tax, and
(b) no deduction is applicable under subsection (3) or (4).
(9) For the purposes of this section income and gains accruing to the scheme are
not to be regarded as brought into charge to tax merely because tax is charged
in relation to the scheme in accordance with section 591C of ICTA.
(10) In this section “market value” is to be construed in accordance with sections
272 and 273 of TCGA 1992.
Valuation of benefits etc.
398 Valuation of benefits
(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.
(a) section 106 (cash equivalent of accommodation over £75,000) applies,
(b) the amount referred to in section 105(2)(b) (the amount 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 administrator of a scheme is charged to tax on a taxable amount
under Case VI of Schedule D under section 394(2).
(2) The individual or the administrator 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
(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) In this Chapter—
“administrator”, in relation to a scheme, has the same meaning as in
section 611AA of ICTA;
“employee” has the same meaning as in Chapter 1 of Part 14 of ICTA (see
section 612(1) of ICTA);
“ex-spouse” means a party to a marriage that has been dissolved or
annulled and, in relation to any person, means the other party to a
marriage with that person that has been dissolved or annulled;
“non-approved retirement benefits scheme” has the same meaning as in
Chapter 1 of this Part (see section 387);
“relative”, in relation to an individual, means—
(a) the wife or husband of the individual,
(b) the widow or widower of the individual,
(c) a child of the individual, and
(d) a dependant of the individual;
“relevant benefits” has the same meaning as in section 612(1) of ICTA.
(2) Section 612(2) of ICTA applies to the references in this Chapter to the provision
of relevant benefits as it applies to such references in Chapter 1 of Part 14 of
Payments and benefits on termination of employment etc.
401 Application of this Chapter
(1) This Chapter applies to payments and other benefits which are received
directly or indirectly in consideration or in consequence of, or otherwise in
(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, blood relative, dependant or personal
(2) Subsection (1) is subject to subsection (3) and sections 405 to 413 (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
402 Meaning of “benefit”
(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 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.
Payments and benefits treated as employment income
403 Charge on payment or other benefit
(1) The amount of a payment or benefit to which this Chapter 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—
(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 it is aggregated with other such payments or benefits to
which this Chapter applies, 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 Chapter 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