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EIM15021 | Employer-financed retirement benefits schemes: definition of 'relevant benefits' and 'excluded benefits'

From HM Revenue & Customs · Employment Income Manual

Section 393B ITEPA 2003

Relevant benefits

‘Relevant benefits’ are defined as meaning any lump sum, gratuity or other benefit provided:

  • on retirement (see EIM15042) or on death (see example EIM15310)

  • in anticipation of retirement (see EIM15149)

  • after retirement or death in connection with past service (see EIM15149)

  • on or in anticipation of, or in connection with, any change in the nature of the employee’s service (see EIM15149)

  • by virtue of a pension sharing order or provision.

This includes a non-cash benefit. There is an example of this point at EIM15205.

However, it does not include:

  • pension income charged to tax under Part 9 ITEPA 2003 (see EIM75000)

  • benefits chargeable under schedule 34 FA 2004 (see PTM113000)

  • ‘excluded benefits’.

Excluded benefits

Benefits which have the character of ‘relevant benefits’ are ‘excluded benefits’ where they are:

  • in respect of ill-health or disablement of an employee during service (see EIM15044)

  • in respect of death by accident of an employee during service (see example at EIM15315)

  • provided under a ‘relevant life policy’ (see EIM15045)

  • benefits excluded by regulation (see below).

Excluding regulations

The regulations providing for benefits to be excluded benefits are:

  • The Armed Forces and Reserve Forces (Compensation Schemes) (Excluded Benefits for Tax Purposes) Regulations 2006 (SI 2006/132) exclude all benefits paid from the Armed Forces Compensation Scheme from 6 April 2006 onwards

  • The Employer-Financed Retirement Benefits (Excluded Benefits for Tax Purposes) Regulations 2006 (SI 2006/210) exclude lump sum death benefits paid on the non-accidental death of an employee during service where those benefits are provided under scheme rules which were in place before 6 April 2006

  • The Employer-Financed Retirement Benefits Schemes (Excluded Benefits for Tax Purposes) Regulations 2007 (SI 2007/3537) exclude several benefits which were not chargeable to tax when provided by the employer where provision continues after the employment has ceased - the exclusion has retrospective effect from 6 April 2006 and applies to the following benefits:

    • living accommodation and related benefits (see EIM15022 for accommodation, EIM15023 for accommodation-related benefits and EIM15024 for benefits for an employee’s family)

    • non-cash benefits received before 6 April 1998 (see EIM15025)

    • welfare counselling (see EIM15026)

    • recreational benefits (see EIM15027)

    • annual parties and similar functions (see EIM15028)

    • writing of wills (see EIM15029)

    • equipment for disabled employees (see EIM15030)

  • The Employer-Financed Retirement Benefits Schemes (Excluded Benefits for Tax Purposes) (Amendment) Regulations 2009 (SI 2009/2886) amend the regulations above, to provide a further exclusion from 6 April 2006, covering the provision of annual health screening and medical check-ups provided by an employer to former employees - this exemption applies if the former employee would have been exempt from tax under section 320B ITEPA had those benefits been provided in the course of their employment, and the former employee was provided with one or other of those benefits at least once during the period of their employment

  • The Employer-Financed Retirement Benefits Schemes (Excluded Benefits for Tax Purposes) (Amendment) Regulations 2011 (SI 2011/2281) further amend the regulations above, to provide some exclusions concerning benefits paid specifically to or in respect of armed forces personnel (see EIM15031) - these exclusions are retrospective to cover the actual times when payments arising from the commitments in the 2008 Service Command Paper and later Armed Forces Covenant began to be made

  • The Employer-Financed Retirement Benefits (Excluded Benefits for Tax Purposes) (Amendment) Regulations 2016 (SI 2016/1036) also further amend the regulations at point above to exclude the provision of trivial benefits to, or in respect of, a former employee (see EIM15033) - this exclusion applies to trivial benefits provided from 6 April 2016 onwards

  • The Coronavirus Life Assurance Scheme (English and Welsh Schemes) (Excluded Benefits for Tax Purposes) Regulations 2020 (SI 2020/615) exclude lump sum benefits paid from the National Health Service and Social Care Coronavirus Life Assurance (England) Scheme 2020 from 20 May 2020 onwards and from the National Health Service and Social Care Coronavirus Life Assurance (Wales) Scheme 2020 from 17 June 2020 onwards

  • The Coronavirus Life Assurance Scheme (Northern Irish Scheme) (Excluded Benefits for Tax Purposes) Regulations 2020 (SI 2020/1198) exclude lump sum benefits paid from the Health and Social Care Coronavirus Life Assurance (Northern Ireland) Scheme 2020 from 20 May 2020 onwards.