EIM06642 - Employment income: exemption for suggestion scheme awards: two or more awards for same suggestion on same occasion: example

Section 322(2) ITEPA 2003

Three employees, C, D and E, make a joint suggestion under a staff suggestion scheme which satisfies the conditions in Section 321 ITEPA 2003 (see EIM06610).The suggestion is adopted, and their employer decides to award 拢2,500 to C, 拢5,000 to D and 拢2,500 to E. The suggestion maximum for the award is 拢5,000 (see EIM06630).

For employee C, the permitted maximum is:

(拢2,500 / (拢2,500 + 拢5,000 + 拢2,500)) x 拢5,000 = 拢1,250

This is less than C鈥檚 award of 拢2,500, so C is taxed on (拢2,500 - 拢1,250) =拢1,250

For employee D, the permitted maximum is:

(拢5,000 / (拢2,500 + 拢5,000 + 拢2,500)) x 拢5,000 = 拢2,500

This is less than D鈥檚 award of 拢5 000, so D is taxed on (拢5 000 - 拢2 500) = 拢2500

The figures for employee E are the same as for employee C.

As the suggestion maximum for this suggestion has been completely used up, any later award in respect of the same suggestion must be taxed in full (see EIM06650).