Income Tax (Earnings and Pensions) Act 2003 section 312E

Section 312B: the indirect employee-ownership requirement

Section 312E sets out the conditions a company must meet to satisfy the indirect employee-ownership requirement for the purpose of qualifying bonus payment exemptions under section 312B.

• A company meets the indirect employee-ownership requirement where a trust (settlement) holds a controlling interest in the company (or its principal company if part of a trading group) and also meets the all-employee benefit requirement throughout the qualifying period.
• The controlling interest requirement and the all-employee benefit requirement are assessed using the same tests that apply for capital gains tax purposes under the Taxation of Chargeable Gains Act 1992.
• If the all-employee benefit requirement is not fully met during the qualifying period, a concession can apply provided the trust is taking steps to meet it — but only if the requirement has never previously been met at any time since 10 December 2013; once it has been met, it must continue to be met.
• For the purpose of assessing compliance, the relevant 12-month reference period ends on the date the bonus payment is made, even if the qualifying period itself is shorter than 12 months.