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HMRC internal manual

Employment Income Manual

Optional remuneration arrangements: excluded exemptions

Section 228A ITEPA 2003

Benefits that are provided through optional remuneration arrangements from 6 April 2017 (subject to the transitional provisions are not covered by existing exemptions within Part 4 of ITEPA 2003 unless the exemption is an ‘excluded exemption’.

An excluded exemption means an exemption conferred by any of the following provisions:

These exemptions are not affected by the changes and, even when provided under optional remuneration arrangements, the benefit remains exempt provided it satisfies the qualifying conditions of the particular exemption.

The exemption under section 307 is only treated as an excluded exemption to the extent that the benefits provided are in respect of retirement benefits. Where the employee is provided with death benefits (for example, the employer takes out a life assurance policy to provide death in service benefits) then the exemption does not apply when provided under optional remuneration arrangements.

It is important to note that contributions under a registered pension scheme in resepct of death benefits, even when provided under optional remuneration arrangements, remain exempt under section 308.