Section 263ZA — Taxation of Chargeable Gains Act 1992: Former employees: employment-related liabilities

Former employees: employment-related liabilities 263ZA 1 This section applies if—

a a deduction of the amount of one or more deductible payments may be made under section 555 of ITEPA 2003 (former employee entitled to deduction in calculating net income in respect of liabilities related to the former employment) in calculating a former employee's net income for a tax year, and b the total amount which may be deducted exceeds the remaining total income for that year.

2 In this section “ excess relief ” means the amount of the difference between—

a the total amount which may be deducted, and b the remaining total income . 2A In this section “ the remaining total income ”, in relation to a tax year, means the former employee's total income for the tax year less reliefs already deducted for the tax year at Step 2 of the calculation in section 23 of ITA 2007 for the purpose of calculating the former employee's income tax liability.

3 The amount of the excess relief may be treated as an allowable loss accruing to the former employee for that tax year. This subsection applies only if the former employee makes a claim for the purpose.

4 But no relief is available under subsection (3) in respect of any amount of the excess relief that exceeds the maximum amount.

5 For the purposes of this section the “ maximum amount ”, in relation to the excess relief for a tax year, means the amount on which the former employee would be chargeable to capital gains tax for that year if the following were disregarded—

a any relief available under this section, b any allowable losses falling to be carried forward to that year from a previous year for the purposes of section 1(3) , c section 1K(1) (the annual exempt amount),

d any relief under section 261B (deduction of trading losses),

and e any relief under section 261D (relief for post-cessation expenditure).

6 A former employee may make a claim under subsection (3) and a claim under section 555(3) of ITEPA 2003 in the same notice.