Guidance

Optional remuneration arrangements

Updated 9 April 2020

Employment Income Manual EIM44010 - optional remuneration arrangements: definition

Section 69A Income Taxes Earnings and Pensions Act (ITEPA) 2003

From 6 April 2017 changes to the legislation mean that the tax and National Insurance Contributions (NICs) advantages where benefits are provided through arrangements under which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

This change has been made to redress the advantages that use of these arrangements allowed. Employees would pay less income tax and NICs in comparison to what they would have paid if they had been paid entirely in cash.

The legislation provides that benefits provided under ‘optional remuneration arrangements’ no longer benefit from the income tax and NICs advantages previously available under salary sacrifice arrangements - see Employment Income Manual EIM42750. In this context, salary sacrifice includes benefits in kind with a cash allowance option and flexible benefits packages with a cash option.

Optional Remuneration Arrangements

For the purposes of the benefits code, a benefit is provided under an optional remuneration arrangement if it is provided under an arrangement of either type A or type B:

• type A arrangements are arrangements under which the employee gives up the right, or the future right, to receive an amount of earnings (for example salary) which would be chargeable to tax under Section 62 ITEPA 2003 in return for the benefit
• type B arrangements are arrangements, other than type A arrangements under which the employee agrees to be provided with a benefit rather than an amount of earnings (for example the option of a cash allowance)

Where a benefit is chosen instead of some form of cash pay, the taxable value of the benefit is the greater of the amount of cash pay given up and the taxable value under the normal benefit in kind rules. Where the two are the same, then apply the normal benefit valuation rules.

A benefit provided under an optional remuneration arrangement includes any benefit or facility, regardless of its form and the manner in which it is provided.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Employment Income Manual EIM44020 - optional remuneration arrangements: the amount foregone

Section 69B ITEPA 2003

From 6 April 2017, changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Where a benefit is provided under an optional remuneration arrangement - the amount of earnings foregone in relation to the benefit that is provided means the amount of earnings mentioned in EIM44010. This is the amount of cash pay given up by the employee in return for the provision of the benefit or the amount of cash pay that the employee could have received instead of that benefit.

If it becomes necessary to apportion an amount of earnings to the benefit, the apportionment is to be made on a just and reasonable basis. For example, where a number of separate benefits are provided to an employee in conjunction with optional remuneration arrangements, usually the employer and the employee will be well aware of the value of the salary or cash given up for each respective benefit and the employer should be able to report the appropriate value. However, where the amount given up for each benefit is not separately identified, the value should be apportioned on a just and reasonable taking into account the facts and circumstances, as long as the total equals the total of the amount foregone.

Example 1

An employer provides its employees with a package of benefits including medical insurance, life assurance and gift vouchers for a national retailer with a face value of £300. These are bought by the employer in bulk at a discount to face value or as a group policy applying its bulk purchasing power. Employees are required to sacrifice salary of £600 in order to access these benefits. In these circumstances, if it becomes necessary to apportion the amount foregone, it may be reasonable to apportion by reference to the cost to the employer of providing the underlying benefit.

Earnings within this section has the same meaning as in Employment income Manual EIM00520, and includes a reference to amounts which would have been earnings if the employee had received them.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where the right to a cash allowance (type B) is removed so the employee no longer has the option of such an allowance, the employee will no longer have type B optional remuneration arrangements. The cash equivalent of the benefit will be taxed on the normal rules.

Some employees have both type A and type B arrangements under which a benefit is provided partly in exchange for the employee giving up an amount of salary and partly in exchange for giving up the option of a cash allowance. Where this is the case, the amount foregone is the total value of the type A and type B arrangements.

Example 2

An employee has the option of a cash allowance of £5,000 (type B) which he decides to give up for a car. However, the employee wants a higher specified model costing a further £1,000. So, he also gives up £1,000 of salary (type A). The amount foregone is £5,000 plus £1,000.

Employment Income Manual EIM44030 - optional remuneration arrangements: transitional provisions

Paragraph 58 to Schedule 2 Finance Act 2017

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn. However, there are a number of transitional rules that apply.

Most arrangements entered into before 6 April 2017 will continue to be subject to the pre-2017 benefit valuation rules until the earlier of:

• variation, renewal (including auto-renewal) or modification of the arrangement
• 6 April 2018

However, where the benefit is the provision of a car with emissions of more than 75g CO2/km, living accommodation and school fees the transitional rules apply for a longer period. The new rules will not apply to these types of benefits until 6 April 2021.

Example 1

An employer operates a flexible benefits scheme under which employees give up the right to receive salary in return for free car parking near their workplace. Employees have to sign up for 12 months car parking. An employee enters into a 12 month salary sacrifice arrangement starting on 1 January 2017. The benefit will continue to be exempt until the contract comes to an end on 31 December 2017. The contract starting on 1 January 2018 will fall within the new rules.

Example 2

An employee agrees with their employer to vary their employment contract so their salary is reduced by £500. At the same time the employer agrees to provide the employee with medical insurance that costs it £400 for 12 months. The agreement is entered into by the employer and employee on 1 February 2017. However, under the terms of the agreement, the employee’s salary is not reduced until 1 May 2017 which is the date when the medical insurance cover starts. Although the arrangements do not come into effect until 1 May, the employer and employee entered into the arrangements before 6 April 2017. Therefore, the transitional rules apply and the new rules will apply from 6 April 2018.

Break in transitional arrangements

Where employees vary or renew their arrangements on or after 6 April 2017 the transitional provisions mean that the date of change or renewal is taken as the date the new rules apply from. This means the transitional arrangements no longer apply from that date.

An arrangement is not regarded as being varied if the variation of the arrangement is only in connection with a replacement because of accidental damage or otherwise for reasons beyond the control of the parties.

Variation of an arrangement is also disregarded if the variation is in connection with an employee’s entitlement to statutory sick pay, statutory maternity pay, statutory adoption pay, statutory paternity pay or statutory shared parental pay.

An arrangement is not regarded as varied if the amendment is caused by the coronavirus (COVID-19).

Cars, living accommodation and school fees

For cars with emissions of more than 75g CO2/km, living accommodation and school fees, where transitional arrangements apply, the new rules will come into effect on the earlier of:

• change, renewal (including auto renewal) or modification of the arrangement
• 6 April 2021

Where the benefit is reduced school fees or a free school place in a fee paying school, provided the original arrangements were entered into before 6 April 2017 even where a new contract is entered into, the transitional provisions will continue to apply until 5 April 2021 provided the new contract relates to:

• the same employment with the same employer
• the same school
• the same child

Example 3

An employee has had a car made available to them by reason of their employment since 6 April 2016 under an optional remuneration arrangement set up to last for four years. The car has registered emissions of 95g CO2/km. The transitional rules apply for the duration of the arrangement or until the arrangement changes for another reason. The benefit charge will continue to be charged on the cash equivalent value.

Example 4

As in the example above, the employee has the same vehicle, under the same arrangements, but due to a road traffic accident in July 2018 his original car is written off and a replacement is provided for the duration of the arrangement. As the variation in the arrangement was beyond the control of the employee, the revised legislation will not take effect at the date the vehicle is changed, the arrangement will continue until either it finishes or is ended early for another reason.

Employment Income Manual EIM44040 - optional remuneration arrangements: vouchers and credit tokens

Sections 81, 87A and 94A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Cash vouchers

Where an optional remuneration arrangement is used to provide cash vouchers to an employee, the relevant amount to be treated as earnings from the employment is the greater of:

• the cash equivalent (the sum of money for which the voucher is capable of being exchanged)
• the amount the employee has foregone in relation to the benefit of the voucher

Non-cash vouchers

Where an optional remuneration arrangement is used to provide non-cash vouchers to an employee, the relevant amount to be treated as earnings from the employment is the greater of:

• the cost of providing the voucher
• the amount the employee has foregone in relation to the benefit of the voucher

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

When determining the taxable value of the benefit and whether to use the cost of providing the benefit or the amount foregone, any amount made good by the employee is not taken into account. However, if any amount has been made good this should be deducted from the relevant amount.

Credit tokens

Where an optional remuneration arrangement is used to provide the use of a credit token to an employee, the relevant amount to be treated as earnings from the employment is the greater of:

• the cost of providing the credit token
• a just and reasonable proportion of the amount foregone in relation to the benefit of the credit token in order to reflect the use of the credit token in the tax year to obtain money, goods and services

The cost of provision is the sum of the individual costs of provision with respect to each occasion when the credit token is used by the employee in the tax year to obtain money, goods or services.

Example

An employer provides employees with the opportunity to enter an optional remuneration arrangement in which they give up £50 of salary each month in return for £50 in non-cash vouchers. The employer has entered into a deal with the voucher supplier to purchase vouchers at a discounted cost of £45. Under the new rules on optional remuneration arrangements, the taxable value of the benefit for the tax year is £600. This is the greater of the cost of providing the vouchers - £540 (£45 x 12) and the amount of salary sacrificed by the employee - £600 (£50 x 12).

When determining the taxable value of the benefit and whether to use the cost of providing the benefit or the amount foregone, any amount made good by the employee is not taken into account. However, if any amount has been made good this should be deducted from the relevant amount.

Employment Income Manual EIM44050 - optional remuneration arrangements: living accommodation

Section 103A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where an optional remuneration agreement is used to provide the employee with living accommodation, the relevant amount to be treated as earnings from the employment is the greater of:

• the modified cash equivalent of the benefit
• the amount foregone in relation to the provision of the benefit

The ‘modified cash equivalent’ in relation to the provision of living accommodation means:

• for living accommodation where the cost of providing it is not over £75,000, the rental value of the accommodation for the taxable period
• for living accommodation where the cost of providing is more than £75,000, the sum of the cash equivalent in steps 1 to 3 in Employment Income Manual EIM11480

This means that when determining the value of the modified cash equivalent to be compared with the amount foregone, do not deduct any rent paid or amount made good.

Example

An employer rents a house for an employee to live in. The rent paid by the employer is £12,000 each year. The employee is required to pay a contribution of £2,500 towards that rental and also sacrifices salary of £3,000. The modified cash equivalent is the rent paid by the employer of £12,000 without taking in to account anything paid by the employee. This is compared with the amount foregone of £3,000. The modified cash equivalent is used in determining the relevant amount. The rent of £2,500 paid by the employee is then deducted from the relevant amount.

Where it is necessary to apportion the benefit charge on the provision of living accommodation under an optional remuneration arrangement, the apportionment should be made on a just and reasonable basis.

As noted above, when determining the taxable value of the benefit and whether to use the cost of providing the benefit or the amount foregone, any rent paid by the employee is not taken into account in determining the relevant amount. However, if any amount has been paid this should be deducted from the relevant amount.

Employment Income Manual EIM44060 - optional remuneration arrangements: cars with CO2 emissions of 75 grams or less

Paragraph 58 Schedule 2 Finance Act 2017

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

The new rules do not apply to cars with emissions of 75 grams CO2 per kilometre or less. Cars with CO2 emissions of 75 grams or less continue to be taxed on the cash equivalent of the benefit without having to make a comparison with the salary foregone.

Example

An employee is provided with a low emission car which is available for their private use in 2017 to 2018 under an optional remuneration arrangement in which the employee gives up £125 per month. The car has emissions of 70g CO2 per kilometre.

The car has a list price of £11,500 and a cash equivalent value of £1,495 (£11,500 x 13%) see Employment Income Manual EIM24705. Although the amount foregone by the employee exceeds the cash equivalent value of the benefit of the car, the new legislation does not apply to low emission cars. The relevant amount to be treated as earnings remains £1,495.

Employment Income Manual EIM44070 - optional remuneration arrangements: cars available for private use

Sections 120A, 121A, 121B and 132A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Cars made available for private use with emissions of more than 75 grams CO2 per kilometre are within the scope of the new rules on optional remuneration arrangements.

The relevant amount to be treated as earnings from the employment is the greater of:

• the modified cash equivalent of the benefit
• the amount foregone in relation to the provision of the benefit

The modified cash equivalent in relation to the benefit of a car means the amount which would be the cash equivalent under the normal method but ignoring any capital contributions made by the employee (Step 3 in Employment Income Manual EIM24350) and any payments the employee is required to make for private use.

Once the relevant amount has been determined a deduction is then made for any capital contribution. This is given by multiplying any capital contribution (up to the maximum of £5,000) by the appropriate percentage. A deduction is then given for any private use contribution.

Example

An employee has a car made available to them in the 2017 to 2018 tax year under the terms of an optional remuneration arrangement in which they give up £300 salary per month. The car has a list price of £20,000 and an appropriate percentage of 17%. The employee also makes a capital contribution of £1,500 for a higher specification vehicle. The cash equivalent value of the vehicle would normally be £3,145 (£20,000 less capital contribution £1,500 = £18,500 x 17%). The modified cash equivalent will, however, be £3,400 as no account is taken of the capital contribution.

The modified cash equivalent is then compared with the amount foregone of £3,600. The amount foregone is greater than the modified cash equivalent so this amount is used in determining the relevant amount. The relevant amount to be treated as earnings will be £3,600 less £255 (capital contribution of £1,500x 17%) = £3,345.

Where a number of separate benefits are provided to an employee in conjunction with optional remuneration arrangements, usually the employer and the employee will be well aware of the value of the salary or cash given up for each respect ive benefit and the employer should be able to report the appropriate value. However, where the amount given up for each benefit is not separately identified the value should be apportioned on a just and reasonable taking into account the facts and circumstances, as long as the total equals the total of the amount foregone.

Classic cars

Section 147A ITEPA 2003

Where a classic car within the definition in Employment Income Manual EIM24400 is made available for an employee’s private use, and under an optional remuneration arrangement, the modified cash equivalent value is also calculated without reference to any capital contributions made by the employee.

Employment Income Manual EIM44080 - optional remuneration arrangements: car fuel for private use

Section 149A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where fuel for a car is made available to an employee who is chargeable to tax in respect of a car, under an optional remuneration agreement, the relevant amount to be treated as earnings from the employment is the greater of:

• the cash equivalent of the benefit of the fuel
• the amount foregone with respect to the benefit of the fuel

Where a number of separate benefits are provided to an employee in conjunction with optional remuneration arrangements, usually the employer and the employee will be well aware of the value of the salary or cash given up for each respective benefit and the employer should be able to report the appropriate value. However, where the amount given up for each benefit is not separately identified the value should be apportioned on a just and reasonable taking into account the facts and circumstances, as long as the total equals the total of the amount foregone.

Example

An employee has a car with an appropriate percentage of 20% (see Employment Income Manual EIM24500) made available to him for the duration of the 2017-18 tax year. The employee also enters an optional remuneration arrangement with their employer under which they give up a £400 per month cash allowance offered by their employer in return for car fuel. The £400 is calculated at the start of the employee’s arrangement to reflect an expected average annual mileage of 35,000.

The cash equivalent of the benefit of the fuel is £4,520 (the fixed amount of £22,600 multiplied by the appropriate percentage) (see Employment Income Manual EIM25600). The cash allowance foregone of £4,800 (£400 × 12) will be the relevant amount to be treated as earnings.

Employment Income Manual EIM44090 - optional remuneration arrangements: vans available for private use

Sections 154, 154A and 155 ITEPA 2003

From April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where a van is made available to an employee, the relevant amount to be treated as earnings from the employment is the greater of:

• the modified cash equivalent of the benefit of the van
• the amount foregone with respect to the benefit of the van

The modified cash equivalent in relation to the benefit of a van means the amount which would be the cash equivalent under the normal method (see Employment Income Manual EIM22790) but ignoring any payments made by the employee for the private use of the van.

Where a number of separate benefits are provided to an employee in conjunction with optional remuneration arrangements, usually the employer and the employee will be well aware of the value of the salary or cash given up for each respect ive benefit and the employer should be able to report the appropriate value. However, where the amount given up for each benefit is not separately identified the value should be apportioned on a just and reasonable taking into account the facts and circumstances, as long as the total equals the total of the amount foregone.

Example

An employee has a van made available to them under an optional remuneration arrangement that does not meet the restricted private use condition as it is available for the employee’s private use. As part of the arrangement the employee has agreed to give up £300 salary each month. The employee makes no further payments for the private use of the van.

The modified cash equivalent of the benefit of the van is calculated under the normal method for 2017-18 as £3,230, so the relevant amount to be treated as earnings is the higher of the modified cash equivalent of the benefit and the amount foregone, which in this case is £3,600 (£300 x 12).

Employment Income Manual EIM44100 - optional remuneration arrangements: van fuel for private use

Section 160A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn. . Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where fuel for a van is made available to an employee who is chargeable to tax in respect of a van in the tax year, under an optional remuneration arrangement, the relevant amount to be treated as earnings from the employment is the greater of:

• the cash equivalent of the benefit of the fuel
• the amount foregone with respect to the benefit of the fuel

Where it is necessary to apportion an amount of earnings to the benefit charge on the provision of fuel under an optional remuneration arrangement, the apportionment should be made on a just and reasonable basis.

Example

The employee in the example in EIM44090 also has fuel made available to him, and under an optional remuneration arrangement he gives up £60 per month as a payment towards his private use. The cash equivalent of the benefit of the fuel is £610, whilst the amount foregone with respect to the benefit of the fuel is £720 (£60 x 12). As the amount foregone is the greater of the two sums the amount of £720 is treated as earnings.

Employment Income Manual EIM44110 - optional remuneration arrangements: taxable cheap loans

Sections 175A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where a taxable cheap loan, as defined in Employment Income Manual EIM26102, is made available to an employee under an optional remuneration arrangement, the relevant amount to be treated as earnings from the employment for the tax year is the greater of:

• the modified cash equivalent of the benefit of the loan
• the amount foregone with respect to the benefit

The modified cash equivalent of the benefit of the loan is the amount of interest that would have been payable on the loan for that year at the official rate of interest.

Example

An employee has an interest free loan of £15,000 made available by their employer outstanding for the tax year 2018/19, when the official rate of interest is 2.5%. The employee agrees under an optional remuneration arrangement to waive his bonus for the tax year of £300 as payment of interest on the loan. The taxable value of the benefit under the revised legislation is £375. This is the greater of the benefit under the normal method of £375 (see Employment Income Manual EIM26215) and the amount foregone of £300.

Replacement loans - Section 186 ITEPA 2003

Where a taxable cheap loan is made available to an employee under an optional remuneration arrangement, and it is a replacement for a previous loan, the relevant amount to be treated as earnings from the employment is calculated as above with the benefit of the replacement loan being the greater of:

• the modified cash equivalent of the benefit of the loan
• the amount foregone with respect to the benefit

A loan provided under an optional remuneration arrangement cannot replace a previously held taxable cheap loan. From 6 April 2017 the calculation is to be made as if the loan is a new loan.

Aggregated loans – Section 187 ITEPA 2003

Where from April 2017 a taxable cheap loan is made available to an employee under an optional remuneration arrangement, and might previously have been aggregated with earlier loans - see Employment Income Manual EIM26180, the relevant amount to be treated as earnings from the employment is calculated as above with the benefit of the loan being the greater of:

• the modified cash equivalent of the benefit of the loan
• the amount foregone with respect to the benefit

A loan made available under an optional remuneration arrangement cannot be aggregated with other taxable cheap loans.

Employment Income Manual EIM44120 - optional remuneration arrangements: employment related benefits

Section 203A ITEPA 2003

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Where employment related benefits that are taxable as general benefits under Chapter 10 of Part 3 of ITEPA are provided to employees under an optional remuneration agreement the normal method of calculating the cash equivalent for those benefits (Employment Income Manual EIM21101) does not apply. The relevant amount to be treated as earnings from the employment for that tax year is the greater of:

• the cost of the benefit
• the amount foregone with respect to the benefit

When determining the taxable value of the benefit and whether to use the cost of providing the benefit or the amount foregone, any amount made good by the employee is not taken into account. However, if any amount has been made good this should be deducted from the relevant amount.

If it becomes necessary to apportion an amount of earnings to the benefit, the apportionment is to be made on a just and reasonable basis.

Section 221 ITEPA covers payments where an employee is absent because of sickness or disability. Section 202 treats any such payments as excluded benefits so they are not charged to tax as benefits in kind. Where provided under optional remuneration arrangements, such benefits are not treated as excluded benefits under the new rules. In that case the tax treatment is as set out above.

Employment Income Manual EIM44130 - optional remuneration arrangements: general exclusion from exemptions

From 6 April 2017 changes to the legislation mean that the tax and NICs advantages where benefits are provided through arrangements in which the employee gives up the right to an amount of earnings in return for a benefit are largely withdrawn.

Transitional provisions apply for a limited period and certain benefits are excluded from this change.

Benefits or facilities that are provided through optional remuneration arrangements from 6 April 2017 (subject to the transitional arrangements) are not covered by existing exemptions from income tax unless the exemption is either a ‘special case exemption’ or ‘an excluded exemption’. A benefit or facility means anything which constitutes employment income or anything which is treated as arising to the employee regardless of the manner of provision or form.

Special case exemptions

A special case exemption means an exemption conferred by any of the following provisions:

• Section 289A ITEPA 2003 - exemption for paid or reimbursed expenses (See Employment Income Manual EIM30200)
• Section 289D ITEPA 2003 - exemption for other benefits (See Employment Income Manual EIM30285)
• Section 308B ITEPA 2003 - exemption for independent advice in respect of conversions and transfers of pension schemes (see Employment Income Manual EIM21802)
• Section 312A ITEPA 2003 - limited exemption for qualifying bonus payments (see Employment Income Manual EIM03051)
• Section 317 ITEPA 2003 - exemption for subsidised meals (See Employment Income Manual EIM21673)
• Section 320C ITEPA 2003 - exemption for recommended medical treatment (see Employment Income Manual EIM21777)
• Section 323A ITEPA 2003 - exemption for trivial benefits provided by employers (See Employment Income Manual EIM21864)

Special case exemptions already have specific salary sacrifice rules and you should continue to apply those, rather than the new rules in determining the taxable value of any benefit covered by such an exemption.

Excluded exemptions

An excluded exemption means an exemption conferred by any of the following provisions:

• Section 239 ITEPA 2003 - exemption for payments and benefits connected with taxable cars, vans and heavy goods vehicles (see Employment Income Manual EIM23035)
• Section 244 ITEPA 2003 - exemption for cycles and cyclist’s safety equipment (see Employment Income Manual EIM21664)
• Section 266(2)( c) - exemption for non-cash vouchers used in conjunction with the exemption for cycles and cyclist’s safety equipment (see Employment Income Manual EIM16105)
• Section 270A - limited exemption for qualifying childcare vouchers (see Employment Income Manual EIM16050)
• Section 308 - exemption for contributions to registered pension schemes
• Section 308A - exemption for contributions to overseas pension schemes (see Pensions Tax Manual PTM111100)
• Section 308C - exemption for the provision of pensions advice (see Employment Income Manual EIMXXXXX)[ref to be added]
• Section 309 - limited exemption for statutory redundancy payments (see Employment Income Manual EIM13760)
• Section 310 - exemption for counselling and other outplacement services (see Employment Income Manual EIM13745)
• Section 311 - exemption for retraining courses (see Employment Income Manual EIM05020)
• Section318 - exemption for employer provided childcare (see Employment Income Manual EIM22000)
• Section 318A - limited exemption for other childcare provisions (see Employment Income Manual EIM21900).

These exemptions are not affected by the new rules.

Note: additional cross references to be added to each of the pages detailed in EIM44130 to reflect the change in legislation and that these benefits are excluded from this change as either special case exemptions or excluded exemptions.