2237.This Part contains provisions that give relief for payments made against liabilities arising from a former office or employment. To qualify for relief those payments must be made in the run-off period defined in the provisions. This Part derives from the provisions in section 92 of FA 1995 but subsections (6) to (8) are dealt as consequential amendments in paragraphs 217 and 219(2) of Schedule 6 to this Act. Subsection (10) is dealt with in sections 409 and 410 of this Act.
2238.In most instances there will not be any income from the relevant employment against which to set the payment incurred because that employment must have ceased. Relief for the payment is therefore given against total income. That contrasts with the corresponding provisions for similar payments incurred in an ongoing office or employment, found in sections 346 to 350 in Chapter 2 of Part 5 of this Act, which derive from section 201AA of ICTA. Under those provisions the payment can only be set against earnings from the employment that gives rise to the liabilities that led to the payment being incurred.
2239.Section 92 of FA 1995 operated by importing concepts from section 201AA of ICTA. This Part does not follow that approach and instead is as self-contained as possible.
2240.This section sets out the circumstances under which entitlement to a deduction arises. It derives from parts of section 92(1) and (5) of FA 1995.
2241.This section gives the start and finish dates of the run-off period referred to in the overview above. It derives from section 92(2)(a) of FA 1995.
2242.Subsection (1) is more precise than the source legislation about when the payment must be made. See Change 134 in Annex 1.
2243.This section gives a method for determining the amount of any deduction due to a former employee in one of two circumstances where that employee has not paid or borne the whole of the cost of the payment personally. It derives from parts of section 92(4) and (5) of FA 1995.
2244.The first circumstance is that the former employer (as defined in section 563) of this Act has borne some or all of the cost involved. The second circumstance is that the cost has been met from the proceeds of a contract of insurance against the risk(s) that gave rise to the need to make the payment. A deduction for the payment involved is available only to the extent that the former employee has been treated as having received a relevant retirement benefit or post-employment earnings.
2245.This section derives from section 201AA(1), (7), (8) and (9) of ICTA and from section 92(2)(b) of FA 1995. It describes the different sorts of payments that can qualify as a deduction under this Part.
2246.This section describes the types of liability that can give rise to payments that are eligible for relief. It derives from section 201AA(2) of ICTA and from section 92(2)(b) of FA 1995.
2247.This section describes the conditions that have to be met if an insurance contract is to fall within the scope of this Part. It derives from section 201AA(3)(a) to (d) and (4) of ICTA and from section 92(2)(b) of FA 1995.
2248.Subsections (2) to (5) state the conditions that have to be met for an insurance contract to come within section 558(1).
2249.This section describes what determines whether insurance contracts are connected with one another. It derives from section 201AA (5) and (6) of ICTA and from section 92(2)(b) of FA 1995.
2250.Subsections (1) to (3) define when insurance contracts are connected.
2251.Subsections (4) to (7) provide for that connection to be ignored in certain specified circumstances.
2252.This section defines what is meant by a “former employee”, giving some non-exhaustive examples of the sort of posts covered. It is based on and developed from the definition of “employment” in section 4 of this Act. It is sufficiently wide in scope to include what are commonly described as “shadow directors”, as defined in the full out words of section 67(1) of this Act. See Note 1 in Annex 2.
2253.This section contains definitions of some terms used throughout this Part. It derives from section 92(4) (part) and (9) of FA 1995.
2254.In particular this section has an extended definition of “former employer”. See Note 1 in Annex 2.
2255.The provisions in this Part are written in terms of the “former employee”. This section extends the provisions so that they apply equally to former office-holders. It echoes the provisions in section 5 of this Act. The section derives from part of section 92(4) and (9) of FA 1995. See Note 1 in Annex 2.