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HMRC internal manual

Employment Income Manual

Tax treatment of mineworkers: payments in lieu of free coal

Section 306 ITEPA 2003Reasonable sums received by miners in lieu of free coal (smokeless fuel in smoke control areas), or for the surrender of any part of the free coal or fuel to which they are entitled under their agreements are not taxable.

Section 306(2) ITEPA 2003 limits the exemption to a payment in place of an amount of free coal that does not exceed the amount reasonably needed for personal use. But Section 306(3) also makes it clear that we must assume that this condition is met unless we have evidence that it is not. The purpose of this limitation is that we do not intend the replacement of Extra-Statutory Concession A6 by Section 306 ITEPA 2003 to result in the loss of the exemption by any person who was within the concession.

For the definition of miner for this purpose, see EIM66695.

Lump sum payments received by mineworkers on redundancy for surrendering their rights to free coal or cash in lieu fall to be treated as payments made on the termination of employment within Part 6 Chapter 3 ITEPA 2003, see EIM13000.