Finance (No. 2) Act 2017

Transactions under employee benefit packages

29 (1) Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1 which is treated as being taken by a person (“P”) if—

(a) P is treated as taking a relevant step by that paragraph by reason of the payment of a sum of money by way of a loan,

(b) the step is not taken under a pension scheme,

(c) the loan was made for the sole purpose of a transaction of P’s with A and which P entered into in the ordinary course of P’s business,

(d) at the time the loan was made (the “relevant time”)—

(i) a substantial proportion of P’s business involved making similar loans to members of the public,

(ii) the transaction with A was part of a package of benefits which was available to a substantial proportion of B’s employees, and

(iii) sub-paragraph (3) does not apply,

(e) the terms on which similar transactions were offered by P under the package of benefits mentioned in paragraph (d)(ii) were generous enough to enable substantially all of the employees of B to whom the package was available at or around the relevant time to take advantage of what was offered (if they wanted to),

(f) the terms on which P entered into the transaction with A were substantially the same as the terms on which at or around the relevant time P normally entered into similar transactions with employees of B under the package of benefits,

(g) if B is a company, a majority of B’s employees to whom the package of benefits was available at the relevant time did not have a material interest (as defined in section 68 of ITEPA 2003) in B, and

(h) there is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement.

(2) For the purposes of sub-paragraph (1)(d)(i)—

(a) a loan is “similar” if it is made for the same or similar purposes as the loan which is the subject of the relevant step, and

(b) “members of the public” means members of the public at large with whom P deals at arm‘s length.

(3) This sub-paragraph applies if any feature of the package of benefits mentioned in sub-paragraph (1)(d)(ii) had or would have been likely to have had the effect that, of the employees of B to whom the package was available, it is employees within sub-paragraph (4) on whom benefits under the package will be wholly or mainly conferred.

(4) The employees within this sub-paragraph are—

(a) directors,

(b) senior employees,

(c) employees who at the relevant time received, or as a result of the package of benefits would have been likely to have received, the higher or highest levels of remuneration, and

(d) if, at the relevant time, B was a company and was a member of a group of companies, any employees not within paragraph (b) or (c) who—

(i) were senior employees in the group, or

(ii) received, or as a result of the package of benefits would have been likely to have received, the higher or highest levels of remuneration in the group.

(5) For the purposes of sub-paragraph (1)(d) and (e) a transaction is “similar” if it is of the same or a similar type to the transaction which P has or had with A.

(6) In this paragraph references to A include references to any person linked with A.

(7) In this paragraph “pension scheme” has the same meaning as in Part 4 of FA 2004 (see section 150(1) of that Act).