EIM06610 - Employment income: exemption for
suggestion scheme awards: conditions for exemption
Section 321 ITEPA 2003
The conditions that must be satisfied for a suggestion scheme
award to qualify for exemption under Section 321 ITEPA 2003 are as
follows:
- the employer’s scheme must be open
on the same terms to
- all the employees of the employer, or
- a particular description of them. For example, a
scheme which is open to all the employees in a particular building,
or in a particular geographical area, will satisfy this
condition.
- the suggestion must relate to the
activities carried on by the employer
- the suggestion was made by an employee who
could not reasonably have been expected to make it in the course of
the duties of their employment, having regard to the
employee’s experience
- the suggestion was not made at a meeting
held for the purpose of proposing suggestions
- the award is an encouragement award (see
EIM06620) or a financial benefit award
(see
EIM06630).
If all the above conditions are satisfied, the award will be
exempt from tax if, or to the extent that, it does not exceed the
permitted maximum for the award. If an award that satisfies the
conditions exceeds the permitted maximum, only the excess will be
taxed.
The amount of the permitted maximum depends on whether the
award is
- an encouragement award (see
EIM06620), or
- a financial benefit award (see
EIM06630).
