Income Tax (Earnings and Pensions) Act 2003 section 394

Charge on benefit to which this Chapter applies

Section 394 establishes how benefits from employer-financed retirement benefits schemes are charged to income tax, including who is liable, the applicable tax rate, and how double taxation is avoided.

• Benefits received by an individual count as their employment income for the tax year of receipt, unless total benefits in the year are £100 or less
• Benefits received by a non-individual (such as a trust or company) are taxed on the responsible person for the scheme at a rate of 45%, which the Treasury may vary by order
• Where a benefit also gives rise to other taxable employment income (such as general earnings or amounts taxable under the disguised remuneration rules), the charge under this section only applies to the excess over that other income, preventing double taxation
• The charge under this Chapter takes priority over all other income tax charges in the Act, though it does not displace any separate liability on general earnings or on amounts taxable under the disguised remuneration provisions in Part 7A