Employment income: exemption for suggestion scheme awards: two or more awards for same suggestion on different occasions: example
Section 322(3) ITEPA 2003
Two employees, A and B, make a joint suggestion under a staff suggestion scheme which satisfies the conditions in Section 321 ITEPA 2003 (see EIM06610).Their employer adopts the suggestion, and makes awards to A and B as follows:
31 March 2004: £1,000 to A and £500 to B
30 September 2004: £3,000 to A and £1,500 to B.
The suggestion maximum for the suggestion, calculated in accordance with EIM06630, is £4,500.
2003/04: the total amount awarded in 2003/04 (£1,500) is less than the suggestion maximum (£4,500), so the awards to A and B on 31/3/04 are wholly exempt. The balance of the suggestion maximum (£3,000) is carried forward to set against the later awards.
2004/05: the apportionment formula in EIM06640 applies.
For employee A, the permitted maximum for the second award is:
|(£3,000 / (£3,000 + £1,500)) x £3,000 = £2,000|
This is less than the amount of A’s second award (£3,000), so the difference (£1,000) is taxable as employment income in 2004/05.
For employee B, the permitted maximum for the second award is:
|(£1,500 / £3,000 + £1,500)) x £3,000 = £1,000|
This is less than the amount of B’s second award (£1,500), so the difference (£500) is taxable as employment income in 2004/05.