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40Provision 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 scheme.

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

(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.

NOTES
Initial Commencement
Specified date

This Act comes into force on 6 April 2005 and has effect, for the purposes of income tax for the year 2005–06 and subsequent tax years, and for the purposes of corporation tax for accounting periods ending after 5 April 2005: see s 883; for transitional provisions and savings see Sch 2 hereto.
Income Tax Allowances, Deductions & Reliefs94 Company Law & Business Entities92 Companies & Corporate Bodies92 Income Tax99 Trading Income93 Class 1 Contributions: Employed Earners99 National Insurance Contributions93 Administration & Collection of Income Tax92 Employment & Labour Law94 Tax Law99 Personal Taxes94 Rights & Duties of Employees & Employers94 Employment Taxes94 Employment Income94

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