Income Tax (Earnings and Pensions) Act 2003 section 69A

Optional remuneration arrangement

Section 69A defines what constitutes an optional remuneration arrangement and sets out how benefits provided under such arrangements are to be treated for the purposes of the benefits code.

• Two types of optional remuneration arrangement exist: Type A (salary sacrifice, where an employee gives up earnings in exchange for a benefit) and Type B (flexible benefits, where an employee chooses a benefit instead of a cash allowance)
• A benefit is regarded as provided under an optional remuneration arrangement so far as it is just and reasonable to attribute it to such an arrangement, regardless of when the arrangement was made
• The fact that an employee makes good part of the cost of a benefit does not, by itself, mean the benefit falls outside the optional remuneration arrangement rules
• Where a benefit is provided partly under optional remuneration arrangements and partly outside them, the benefits code applies separately to each part, with just and reasonable apportionments where necessary