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HMRC internal manual

Employment Income Manual

Employment income: exemption for long service testimonial awards: maximum exempt amount

Section 323 ITEPA 2003 and S.I. 2003 No.1361

An award that satisfies the conditions in Section 323 (see EIM01500) is exempt from tax if, or to the extent that, the chargeable amount does not exceed £50 for each year of service with the same employer (see EIM01504). For awards made on or before 12 June 2003 the limit was £20 per year of service.

The chargeable amount, in relation to an award, is the amount that would be included inthe employee’s taxable earnings if the exemption did not apply. For most employees this will be the cost to the employer. For 2015/16 and earlier only, employees in lower paid employment, it will be the second hand value of the award.

If the chargeable amount exceeds the £50 per year of service limit (£20 per year ofservice for awards made on or before 12 June 2003), only the excess is taxable.

As regards multiple awards, see EIM01503.