Income Tax (Trading and Other Income) Act 2005 section 778

Incentives to use electronic communications

Section 778 provides an income tax exemption for incentive payments or benefits received under regulations designed to encourage the use of electronic communications with HMRC.

• Any incentive received under regulations made under Schedule 38 to the Finance Act 2000 is exempt from income tax.
• Schedule 38 to FA 2000 gives the government power to make regulations offering incentives for using electronic communications.
• The exemption applies regardless of the form the incentive takes, whether cash or otherwise.
• The purpose is to encourage taxpayers to engage with HMRC electronically without creating an additional tax liability on the incentive itself.