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HMRC internal manual

Employment Income Manual

Employee Ownership Trusts – qualifying bonus payments: The office-holder requirement

Section 312F ITEPA 2003


A company will be unable to make payments of qualifying bonuses if the number of directors or office holders and other employees connected with them when compared to the total number of employees exceeds a ratio of 2/5.

The ratio is expressed in terms of an appropriate fraction which cannot exceed 2/5.  The numerator is known as ND which is the numbers of directors or other office-holders of the company plus any other employees who are connected with them.  The denominator is known as NE which is the number of persons who are employees or office holders of the company.