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Legislation
Income Tax (Earnings and Pensions) Act 2003

Crossheading Employment income

  • Section 554Z2 Value of relevant step to count as employment income
  • Section 554Z2A Exception to section 554Z2(1): close companies
  • Section 554Z3 Value of relevant step
  • Section 554Z4 Residence issues
  • Section 554Z4A Temporary non-residents
  • Section 554Z5 Overlap with money or asset subject to earlier tax liability
  • Section 554Z6 Overlap with certain earnings
  • Section 554Z7 Exercise price of share options
  • Section 554Z8 Cases where consideration given for relevant step
  1. Employment income
  2. Value of relevant step to count as employment income

Section 554Z2 | Value of relevant step to count as employment income F1

From legislation.gov.uk

(1)If this Chapter applies by reason of a relevant step, the value of the relevant step (see section 554Z3) counts as employment income of A in respect of A's employment with B—F1

(a)if the relevant step is taken before A's employment with B starts, for the tax year in which the employment starts, orF1

(b)otherwise, for the tax year in which the relevant step is taken.F1

(1AA)But subsection (1) is subject to section 554Z2A (close companies).F1F2

(1A)Where the value of a relevant step would (apart from this subsection) count as employment income of more than one person—F1F3

(a)the value of the relevant step is to be apportioned between each of those persons on a just and reasonable basis, andF1F3

(b)subsection (1) applies as if the reference to the value of the relevant step in relation to A were a reference to so much of the value of the relevant step that is apportioned to A.F1F3

(2)If the relevant step gives rise to—F1

(a)an amount which (apart from this subsection) would be treated as earnings of A under a provision of the benefits code, orF1

(b)any income of A which (apart from this subsection) would be dealt with under Chapter 3 of Part 4 of ITTOIA 2005,F1

subsection (1) applies instead of that provision of the benefits code or Chapter 3 of Part 4 of ITTOIA 2005 (as the case may be).

(3)In particular, in a case in which the relevant step is the making of an employment-related loan (within the meaning of Chapter 7 of Part 3), the effect of subsection (2)(a) is that the loan is not to be treated for any tax year as a taxable cheap loan for the purposes of that Chapter.F1

(4)See paragraph 37 of Schedule 11 to F(No. 2)A 2017 for provision about the effect of subsection (2)(a) in a case in which the relevant step is within paragraph 1 of that Schedule.F1F4

Notes

  1. F1

    Pt. 7A inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 1

  2. F2

    S. 554Z2(1AA) inserted (with effect in accordance with Sch. 1 para. 14 of the amending Act) by Finance Act 2018 (c. 3), Sch. 1 para. 3(1)

  3. F3

    S. 554Z2(1A) inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 18(2)

  4. F4

    S. 554Z2(4) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 38

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