Taxes Consolidation Act 1997 section 777

Charge to income tax in respect of certain relevant benefits provided for employees

Section 777 imposes a general charge to income tax on an employee where the employer makes payments under a retirement benefits scheme for the benefit of that employee, and sets out how the taxable amount is determined where benefits are not fully funded by employer contributions.

• Employer contributions to a retirement benefits scheme are treated as taxable Schedule E income of the employee for the year in which they are paid, unless otherwise chargeable to income tax (section 778 suspends this charge for approved schemes).
• Where the employee's retirement benefits are not fully secured by employer contributions, the estimated cost of a third party providing those benefits is deemed to be the employee's taxable income, calculated either as annual payments or as a single lump sum.
• Where an employer contribution covers more than one employee, it is apportioned among the individual employees by reference to the separate cost of securing each employee's benefits.
• Benefits provided for an employee include benefits payable to the employee's spouse, civil partner, widow, widower, surviving civil partner, children, dependants, personal representatives or children of the surviving civil partner.

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