Part 7A

Employment income provided through third parties
CHAPTER 2

Treatment of relevant step for income tax purposes

Employment income

Value of relevant step to count as employment income
554Z2
1
If this Chapter applies by reason of a relevant step, the value of the relevant step (see section 554Z3) counts as employment income of A in respect of A's employment with B—
a
if the relevant step is taken before A's employment with B starts, for the tax year in which the employment starts, or
b
otherwise, for the tax year in which the relevant step is taken.
1AA
But subsection (1) is subject to section 554Z2A (close companies).
1A
Where the value of a relevant step would (apart from this subsection) count as employment income of more than one person—
a
the value of the relevant step is to be apportioned between each of those persons on a just and reasonable basis, and
b
subsection (1) applies as if the reference to the value of the relevant step in relation to A were a reference to so much of the value of the relevant step that is apportioned to A.
2
If the relevant step gives rise to—
a
an amount which (apart from this subsection) would be treated as earnings of A under a provision of the benefits code, or
b
any income of A which (apart from this subsection) would be dealt with under Chapter 3 of Part 4 of
ITTOIA
2005,
subsection (1) applies instead of that provision of the benefits code or Chapter 3 of Part 4 of
ITTOIA
2005 (as the case may be).
3
In particular, in a case in which the relevant step is the making of an employment-related loan (within the meaning of Chapter 7 of Part 3), the effect of subsection (2)(a) is that the loan is not to be treated for any tax year as a taxable cheap loan for the purposes of that Chapter.
4
See paragraph 37 of Schedule 11 to F(
No.
2)A 2017 for provision about the effect of subsection (2)(a) in a case in which the relevant step is within paragraph 1 of that Schedule.
Pt. 7A Ch. 2 excluded (6.4.2017) by The Sporting Testimonial Payments (Excluded Relevant Step) Regulations 2016 (S.I. 2016/1250), regs. 1(1), 2(1) (with reg. 2(2))
Pt. 7A Ch. 2 disapplied (with effect in accordance with reg. 1(2) of the amending S.I.) by The Employment Income Provided Through Third Parties (Excluded Relevant Steps) Regulations 2011 (S.I. 2011/2696), regs. 1(1), 3, 4
Pt. 7A inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 1
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 29(1)
S. 554Z2(2)(a) modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 37(2)
S. 554Z2(1A) inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 18(2)
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 35(1)
Pt. 7A modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 35(6)
S. 554Z2(4) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 38
Pt. 7A modified (22.7.2020) by 2017 c. 32, Sch. 11 para. 1A(2)(6) (as inserted by Finance Act 2020 (c. 14), s. 16(3))
S. 554Z2(1AA) inserted (with effect in accordance with Sch. 1 para. 14 of the amending Act) by Finance Act 2018 (c. 3), Sch. 1 para. 3(1)
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 27(1)
Pt. 7A Ch. 2 excluded (22.7.2020) by 2017 c. 32, Sch. 11 para. 35ZA (as inserted by Finance Act 2020 (c. 14), Sch. 2 para. 38)
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 25
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 31
Pt. 7A modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 1(8)