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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Employment income: exemption for suggestion scheme awards: two or more awards for same suggestion on same occasion: example

Section 322(2) ITEPA 2003

Three employees, C, D and E, make a joint suggestion under a staff suggestion scheme which satisfies the conditions in Section 321 ITEPA 2003 (see EIM06610).The suggestion is adopted, and their employer decides to award £2,500 to C, £5,000 to D and £2,500 to E. The suggestion maximum for the award is £5,000 (see EIM06630).

For employee C, the permitted maximum is:

 

(£2,500 / (£2,500 + £5,000 + £2,500)) x £5,000 = £1,250

This is less than C’s award of £2,500, so C is taxed on (£2,500 - £1,250) =£1,250

For employee D, the permitted maximum is:

 

(£5,000 / (£2,500 + £5,000 + £2,500)) x £5,000 = £2,500

This is less than D’s award of £5 000, so D is taxed on (£5 000 - £2 500) = £2500

The figures for employee E are the same as for employee C.

As the suggestion maximum for this suggestion has been completely used up, any later award in respect of the same suggestion must be taxed in full (see EIM06650).