EIM15021 - Non-approved and employer-financed retirement benefits schemes: definitions of "relevant benefits"

Sections 612(1) ICTA 1988 (non-approved schemes) and Section 393B ITEPA 2003 (employer-financed schemes)

As stated in EIM15020 the definition of “relevant benefits” differs for non-approved and employer-financed schemes.

(1) For non-approved schemes it means:

any pension, lump sum, gratuity or other like benefit given:

• on retirement (see EIM15022) or on death (see example EIM15410), or
• in anticipation of retirement (see EIM15149), or
• after retirement or death in connection with past service (see EIM15149), or
• on or in anticipation of or in connection with any change in the nature of the employee's service (see EIM15149) or
• by virtue of a pension sharing order or provision

Only cash benefits count as “relevant benefits” for non-approved schemes (see example at EIM15205).

But it does not include benefits provided solely by reason of an employee's disablement or death by accident occurring whilst he or she is in the employer's service (see example EIM15415) nor benefits provided on ill-health (see EIM15024).

(2) For employer-financed schemes “relevant benefits” means:

any lump sum, gratuity or other benefit provided

• on retirement (see EIM15022) or on death (see example EIM15410), or
• in anticipation of retirement (see EIM15149), or
• after retirement or death in connection with past service (see EIM15149), or
• on or in anticipation of or in connection with any change in the nature of the employee's service (see EIM15149) or
• by virtue of a pension sharing order or provision

. There is an example of this point at EIM15205.

However, it does not include any of the following:

• pension income charged to tax under Part 9 ITEPA 2003 (see EIM74000)
• benefits chargeable under Schedule 34 FA 2004 (see the Registered Pension Scheme Manual (RPSM) pages RPSM13102020 onwards)
• “excluded benefits”.
• “Excluded benefits” are benefits: in respect of ill-health or disablement of an employee during service
• in respect of death by accident of an employee during service (see example EIM15415)
• under a “relevant life policy”. Guidance on the meaning of this is available in the Insurance Policyholder Taxation Manual (IPTM)
• excluded by regulation (see below).

1. The Armed Forces and Reserve Forces (Compensation Schemes) (Excluded Benefits for Tax Purposes) Regulations 2006 S.I. 2006 No.210 excludes all benefits paid from the Armed Forces Compensation Scheme from 6 April 2006 onwards.
2. The Employer-Financed Retirement Benefits (Excluded Benefits for Tax Purposes) Regulations 2006 S.I.2006 No.210 excludes lump sum death benefits paid on the non- accidental death of an employee during service where those benefits are provided under scheme rules which were in place before 6 April 2006.
3. The Employer-Financed Retirement Benefits Schemes (Excluded Benefits for Tax Purposes) Regulations 2007 S.I. 2007 No.3537. exclude a number of benefits which were not chargeable to tax when provided by the employer where provision continues after the employment has ceased. The exclusion has retrospective effect from 6 April 2006 and applies to the following benefits: