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HMRC internal manual

Employment Income Manual

Employment income: exemption for suggestion scheme awards: introduction

Section 321 ITEPA 2003

In general, an award made by an employer to an employee under the terms of a staff suggestion scheme is taxable as earnings within Section 62 ITEPA 2003 (see EIM00520) or as a benefit within Section 203 (see EIM21001 onwards).

For 2002/03 and earlier years, suggestion scheme awards were exempt from tax if they satisfied the conditions in Extra-Statutory Concession A57 (see SE06600).

For 2003/04 onwards, the concession was replaced by the statutory exemption in Section 321 ITEPA 2003. The conditions for exemption remain much as they were under the terms of the concession, but there are more detailed rules that apply when an employer makes more than one award for the same suggestion. The guidance on Section 321 is arranged as follows:

EIM06610 Conditions for exemption
EIM06620 The permitted maximum: encouragement awards
EIM06630 The permitted maximum: financial benefit awards
EIM06640 Two or more awards for same suggestion on same occasion
EIM06650 Two or more awards for same suggestion on different occasions
EIM06660 Employee making more than one successful suggestion
EIM06670 Employer using scheme to make non-qualifying awards