EIM06652 - Employment income: exemption for suggestion scheme awards: two or more awards for same suggestion on different occasions: example
Section 322(3) ITEPA 2003
Two employees, A and B, make a joint suggestion under a staff
suggestion scheme which satisfies the conditions in Section 321
ITEPA 2003 (see
EIM06610). Their employer adopts the
suggestion, and makes awards to A and B as follows:
31 March 2004: £1,000 to A and £500 to B
30 September 2004: £3,000 to A and £1,500 to B.
The suggestion maximum for the suggestion, calculated in
accordance with
EIM06630, is £4,500.
2003/04: the total amount awarded in 2003/04
(£1,500) is less than the suggestion maximum (£4,500), so
the awards to A and B on 31/3/04 are wholly exempt. The balance of
the suggestion maximum (£3,000) is carried forward to set
against the later awards.
2004/05: the apportionment formula in
EIM06640 applies.
For employee A, the permitted maximum for the second award
is:
| £3,000 | x | £3,000 | = | £2,000 |
| £3,000 + £1,500 |
This is less than the amount of A’s second award
(£3,000), so the difference (£1,000) is taxable as
employment income in 2004/05.
For employee B, the permitted maximum for the second award
is:
| £1,500 | x | £3,000 | = | £1,000 |
| £3,000 + £1,500 |
This is less than the amount of B’s second award (£1,500), so the difference (£500) is taxable as employment income in 2004/05.
