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Income Tax (Earnings and Pensions) Act 2003

Section 265: Third party entertainment

1080.This section derives from the exemption in section 155(7) of ICTA. If the provision of the benefit in this case is “by reason of the employment” it would be within the terms of section 201 without the exemption in subsection (1).

1081.The conditions in subsections (2) to (5) make it clear that the reason for the entertainment must be gratuitous, and not in any way a reward for past or future services, nor from anyone connected with the employer. If these conditions are not met, there is no exemption.

1082.The exemption is expressed as there being “no liability to income tax”. This is wider than section 155(7) of ICTA which is expressed as an exemption from section 154 of ICTA, the general charging provision for benefits in kind. See Change 57 in Annex 1.

1083.If the provision of the entertainment is by way of a non-cash voucher or a credit-token, there are corresponding exemptions in sections 266 and 267. In ICTA these exemptions are in sections 141(6B) and 142(3B).

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