Income Tax (Earnings and Pensions) Act 2003

395 Application of sections 396 and 397: general rules

(1) Section 394 is subject to—

(a) section 396 (which provides that certain lump sums are not taxed by virtue of section 394), and

(b) section 397 (which provides for the calculation of the amount taxed by virtue of section 394 in relation to certain lump sums).

(2) Section 396 applies in relation to a lump sum only if the condition in subsection (4) below is met.

(3) Section 397 applies in relation to a lump sum only if—

(a) the condition in subsection (4) below is met, or

(b) an employee has paid any sum or sums with a view to the provision of any relevant benefits under the scheme under which the lump sum is provided.

(4) The condition mentioned in subsections (2) and (3)(a) is that—

(a) an employer has paid any sum or sums with a view to the provision of any relevant benefits under the scheme under which the lump sum is provided, and

(b) an employee has been assessed to tax in respect of the sum or sums so paid—

(i) by virtue of section 595(1) of ICTA, or

(ii) by virtue of the sum or sums counting as employment income of the employee under section 386(1) of this Act.

(5) For the purposes of this section it must be assumed that, unless the contrary is shown—

(a) no sums have been paid with a view to the provision of relevant benefits, and

(b) an employee has not been assessed in respect of a sum or sums as mentioned in subsection (4)(b).