Section 40 | Provision of qualifying benefits

(1)For the purposes of section 38 qualifying benefits are provided if there is—

(a)a payment of money, or

(b)a transfer of assets,

which meets condition A, B, C or D.

(2)Condition A is that the payment or transfer gives rise both to an employment income tax charge and to an NIC charge.

(3)Condition B is that the payment or transfer would give rise to both charges if—

(a)the duties of the employment in respect of which the payment or transfer was made were performed in the United Kingdom, and

(b)the person in respect of whose employment the payment or transfer was made met at all relevant times the conditions as to residence or presence in Great Britain or Northern Ireland prescribed under section 1(6) of the Contributions and Benefits Act.

(4)Condition C is that the payment or transfer is made in connection with the termination of the recipient's employment with the employer.

(5)Condition D is that the payment or transfer is made under an employer-financed retirement benefits schemeand the payment or transfer—^F1

(a)gives rise to an employment income tax charge under Chapter 2 of Part 6 of ITEPA 2003 or under Part 9 of that Act, or^F1

(b)is an excluded benefit as defined in section 393B(3) of that Act.^F1

(6)None of the conditions is met if the payment or transfer is by way of loan.

(6A)For the purposes of section 38 qualifying benefits are also provided if—^F2

(a)a relevant step within the meaning of Part 7A of ITEPA 2003 is taken, and^F2

(b)Chapter 2 of that Part applies by reason of the step.^F2

(7)In this section—

“the Contributions and Benefits Act” means—

(a)the Social Security Contributions and Benefits Act 1992 (c. 4), or

(b)the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),

“employment income tax charge” means a charge to tax under ITEPA 2003 (whether on the recipient or on someone else), and

“NIC charge” means a liability to pay national insurance contributions under section 6 (Class 1 contributions), section 10 (Class 1A contributions) or section 10A (Class 1B contributions) of the Contributions and Benefits Act.