Income Tax (Trading and Other Income) Act 2005 section 40

Provision of qualifying benefits

Section 40 defines what constitutes the provision of "qualifying benefits" for the purposes of section 38, which restricts certain deductions from trading profits.

• A qualifying benefit is a payment of money or transfer of assets that meets one of four conditions (A to D), but loans are always excluded
• Condition A applies where the payment or transfer gives rise to both an employment income tax charge and a National Insurance contributions charge; Condition B extends this to cases where those charges would have arisen but for the employee working overseas or not meeting UK residency requirements
• Condition C covers payments or transfers made in connection with the termination of the recipient's employment; Condition D covers payments or transfers made under an employer-financed retirement benefits scheme that give rise to specific tax charges or constitute excluded benefits
• A qualifying benefit can also arise where a "relevant step" is taken within the disguised remuneration rules in Part 7A of ITEPA 2003 and Chapter 2 of that Part applies