Income Tax Act 2007 section 496A

Discretionary payments by trustees: employment income

Section 496A defines what counts as a discretionary employment income payment made by trustees and sets the conditions under which relief under section 496B may apply.

• A discretionary employment income payment is a payment made out of income, at the trustees' or another person's discretion, to a beneficiary where it constitutes non-exempt employment income solely because of that payment
• The relief in section 496B applies only where UK-resident trustees of a settlement make such a payment during a tax year in which the settlement qualifies as an employee benefit settlement
• An employee benefit settlement is one whose trust terms restrict the use of settled property to benefiting persons in employment-related classes (or those classes plus charitable purposes)
• A relevant class is defined by reference to employment in a trade or profession, employment by or office-holding with a body carrying on a trade, profession or undertaking, or family members and dependants of such persons