Part 4

Employment income: exemptions
Chapter 11

Miscellaneous exemptions

Awards and gifts

Suggestion awards
321
1
This section applies where an employer establishes a scheme for the making of suggestions that is open on the same terms—
a
to employees of the employer generally, or
b
to a particular description of them.
2
No liability to income tax arises in respect of an encouragement award or financial benefit award made under the scheme for a suggestion which meets conditions A to C if, or to the extent that, it does not exceed the permitted maximum for the award under section 322.
3
Condition A is that the suggestion relates to the activities carried on by the employer.
4
Condition B is that the suggestion is made by an employee who could not reasonably be expected to make it in the course of the duties of the employment, having regard to the employee’s experience.
5
Condition C is that the suggestion is not made at a meeting held for the purpose of proposing suggestions.
6
In this section and section 322—
- “encouragement award” means an award, other than a financial benefit award, made for a suggestion with intrinsic merit or showing special effort, and
- “financial benefit award” means an award for a suggestion relating to an improvement in efficiency or effectiveness which the employer has decided to adopt and reasonably expects will result in a financial benefit.
Pt. 4 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 26(3)