EIM45085 | Employment income provided through third parties: relevant steps: Section 554D: asset made available: events before 6 April and after 5April 2011: examples

Section 554D ITEPA 2003

EIM45080 ‘Asset made available before 6 April 2011’ explains that Section 554D only applies if relevant steps are taken on or after 6 April 2011.

These examples illustrate how this rule applies if events relevant to Section 554D take place before 6 April 2011.

Example: asset starts to be made available to employee before 6 April 2011, employment continues

On 1 October 2009 an EBT acquires a freehold property. The property is immediately made available to employee A and continues to be made available after 5 April 2011.

Employee A continues to hold the same employment and therefore, if Section 554D were to apply, it would be through the step in Section 554D(1)(a) (substantially similar to transfer).

There is no need to consider whether the property is made available on terms that would bring it within Section 554D(1)(a) as the step of making the property available occurred before 6 April 2011. Section 554D will not apply.

Example: employment ceases, asset starts to be made available to ex-employee before 6 April 2011

On 1 May 2008 an EBT acquires a freehold property. Employee A ceases employment with employer B on the same date. Just over two years later, on 1 June 2010, the EBT makes the property available to employee A. It remains available after 5 April 2011.

The property started to be made available to A more than two years after the end of the relevant period. So, if Section 554D were to apply, it would be through the step in Section 554D(1)(b) (making the asset available on or after the end of the relevant period).

Here, the step that would have been within Section 554D(1)(b) took place on 1 June 2010 before the 6 April 2011 commencement date for the Part 7A rules. Section 554D will not apply.

Example: employment ceases before 6 April 2011, asset starts to be made available to exemployee after 5 April 2011

On 1 May 2010 an EBT acquires a freehold property. Employee A ceases employment with employer B on the same date.

Just over two years later, on 1 June 2012, the EBT makes the property available to employee A.

The property started to be made available to A more than two years after the end of the relevant period. So, if Section 554D were to apply, it would be through the step in Section 554D(1)(b) (making the asset available on or after the end of the relevant period).

Here, although A’s employment ended before 6 April 2011, the asset was made available on 1 June 2012 therefore, the relevant step was taken after the 6 April 2011 commencement date for the Part 7A rules. So Section 554D (1)(b) will apply in this case.

Example: asset starts to be made available to employee before 6 April 2011, employment ceases, asset continues to be made available

On 1 March 2010, an EBT starts to make a freehold property available to employee A.

On 1 April 2010 employee A ceases employment with employer B. The freehold property remains available to A and is still available on 1 April 2012, which is two years after the end of A’s employment.

The property remained available to A at the end of the two year relevant period that began when A’s employment ended. Therefore, if Section 554D were to apply, it would be through the step in Section 554D(2).

However, as the property started to be made available before 6 April 2011, the conditions for Section 554D(2) to apply are not fully satisfied. Section 554D will not apply.