Income Tax (Earnings and Pensions) Act 2003 section 554G

Exclusions: transactions under employee benefit packages

Section 554G sets out the conditions under which a transaction forming part of an employee benefit package is excluded from the disguised remuneration rules in Chapter 2.

• A relevant step is excluded from the disguised remuneration charge where it arises from a genuine commercial transaction carried out in the ordinary course of the third party's business, forms part of a widely available employee benefit package, and has no connection to a tax avoidance arrangement.
• Where the step involves a loan, the lender must make similar loans to the general public as a substantial part of its business, and the loan package must not be designed so that benefits are conferred wholly or mainly on directors, senior employees, or those on the highest levels of pay.
• Where the step is not a loan, it must form part of a benefit package available to a substantial proportion of the employer's workforce or to a substantial proportion of employees of comparable status, and the terms must be generous enough for substantially all eligible employees to take advantage of the offer.
• References to the employee throughout the section generally include any person linked with the employee, and where the step is not a loan, the employee population used for comparison is limited to those whose duties are performed in the United Kingdom.