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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Employment income provided through third parties: Part 7A income: general

Section 554Z2 ITEPA 2003

If Part 7A Chapter 2 ITEPA 2003 applies by reason of a relevant step, employment income arises as a result.

What income?

The value of the relevant step counts as employment income.

Whose income?

The general rule is that it counts as employment income of A.

Special rules apply if A has died. See EIM45865.

What kind of income?

It counts as employment income of A in respect of A’s employment with B.

This rule takes priority over the benefits code. So, for example, if the relevant step is the making of an employment-related loan, the loan gives rise to Part 7A income and is not treated as a taxable cheap loan. On the benefits code and loans, see EIM26101 onwards.

Similarly, this rule takes priority over Part 4 Chapter 3 ITTOIA 2005 (savings and investment income: dividends etc from UK resident companies etc).

When?

In general, it counts as A’s employment income for the tax year in which the relevant step is taken.

But, if the relevant step is taken before A’s employment with B starts, it counts as A’s employment income for the tax year in which the employment starts.

See also EIM45720 (residence issues).

How much?

For the measure of the income, see EIM45710.