Income Tax (Earnings and Pensions) Act 2003 section 554B

Relevant steps: earmarking etc. of sum of money or asset

Section 554B defines what counts as a "relevant step" when a person earmarks or begins holding money or assets with a view to later providing benefits connected with someone's employment.

• A relevant step occurs when a person ("P") earmarks — however informally — a sum of money or asset with a view to a later step being taken in relation to that sum or asset, or anything derived from it.
• A relevant step also occurs when money or an asset simply starts being held by or on behalf of P specifically with the intention that a later relevant step will follow, regardless of whether it was previously held on a different basis.
• It does not matter if the details of the later step have not been worked out, if any conditions that must be met might never be met, or if the employee (or anyone linked with them) has no legal right to have a relevant step taken.
• Where the employer takes a step within section 554B with a view to paying a contribution towards retirement benefits that does not receive tax relief under Part 4 of the Finance Act 2004 and is not paid immediately, the employer is treated as a relevant third person, bringing the arrangement within the scope of Part 7A.