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HMRC internal manual

Employment Income Manual

Optional remuneration arrangements: special case exemptions

Chapters 7A, 9, 10A, and 11 of Part 4 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 from Income Tax within Part 4 of ITEPA 2003 unless the exemption is an ‘excluded exemption’.

A special case exemption means an exemption conferred by any of the following provisions:

Special case exemptions already have specific salary sacrifice rules and you should continue to apply those when considering whether an exemption continues to apply. Then work out the amount to treat as earnings from the employment for any benefit that would otherwise be covered by such an exemption.

The special case rules are only relevant for determining whether the exemption applies. If, having applied the specific special case exemption there is a taxable benefit, then apply the optional remuneration rules in the usual way. The relevant amount to treat as earnings from the employment for the tax year is the greater of the cost of the benefit and the amount foregone. 


An employee is provided with a benefit under salary sacrifice arrangements that would otherwise be exempt as a trivial benefit under section 323A ITEPA 2003. The employee sacrifices £55 for the benefit, which costs the employer £45 to provide. Because the benefit has been provided under a relevant salary sacrifice arrangement, condition C of the exemption is not satisfied so the benefit is not exempt from Income Tax. The amount chargeable to tax and NICs is equal to the salary foregone of £55 as this is greater than the cost of the benefit.