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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Non-approved schemes: cash benefits received

Section 393(2) ITEPA 2003

Most benefits from non-approved schemes are paid as a lump sum. However, they may also take the form of a pension, an annuity or an annual payment or be in non-cash form. These various payments are dealt with as follows:

  1. Where the benefit is paid as a pension, or is any other kind of income within Part 9 ITEPA 2003 (see EIM74000 and subsequent guidance), it is taxed only under that Part. Section 394 ITEPA 2003 does not tax any income that falls within Part 9.
  2. Where the benefit is paid as an annuity or other annual payment and it is not within Part 9 ITEPA 2003 (see EIM74000 and subsequent guidance) it is chargeable to income tax
  3. Where the benefit is paid as a lump sum it counts as employment income under Section 394 ITEPA 2003, but see EIM15422 for exceptions. Such a lump sum is chargeable even if it is not a “relevant benefit” as defined in EIM15403.
  4. Where the benefit is in non-cash form, see EIM15421.

See EIM15409 for who is assessed.