Section 554Z2 — Income Tax (Earnings and Pensions) Act 2003: Value of relevant step to count as employment income

Value of relevant step to count as employment income 554Z2 1 If this Chapter applies by reason of a relevant step, the value of the relevant step (see section 554Z3) counts as employment income of A in respect of A's employment with B—

a if the relevant step is taken before A's employment with B starts, for the tax year in which the employment starts, or b otherwise, for the tax year in which the relevant step is taken. 1AA But subsection (1) is subject to section 554Z2A (close companies). 1A Where the value of a relevant step would (apart from this subsection) count as employment income of more than one person—

a the value of the relevant step is to be apportioned between each of those persons on a just and reasonable basis, and b subsection (1) applies as if the reference to the value of the relevant step in relation to A were a reference to so much of the value of the relevant step that is apportioned to A.

2 If the relevant step gives rise to—

a an amount which (apart from this subsection) would be treated as earnings of A under a provision of the benefits code, or b any income of A which (apart from this subsection) would be dealt with under Chapter 3 of Part 4 of ITTOIA 2005, subsection (1) applies instead of that provision of the benefits code or Chapter 3 of Part 4 of ITTOIA 2005 (as the case may be).

3 In particular, in a case in which the relevant step is the making of an employment-related loan (within the meaning of Chapter 7 of Part 3), the effect of subsection (2)(a) is that the loan is not to be treated for any tax year as a taxable cheap loan for the purposes of that Chapter.

4 See paragraph 37 of Schedule 11 to F( No. 2)A 2017 for provision about the effect of subsection (2)(a) in a case in which the relevant step is within paragraph 1 of that Schedule.