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

Excluded payments

Section 312H defines what counts as an "excluded" payment for the purposes of the qualifying bonus payment exemption, specifically targeting salary sacrifice and similar arrangements.

• A bonus payment is "excluded" from the exemption if the employee has given up other earnings or employment income in return for receiving it
• A payment is also excluded where the employee and employer have agreed that the employee will receive the bonus instead of some other form of employment income
• The arrangements giving rise to the exclusion can have been made either before or after the employment began
• These rules apply equally to former employees as well as current employees