Staff suggestion schemes are operated by many employers in both the public and private sectors to encourage employees to suggest ways, outside the usual scope of their work, in which efficiency and productivity, etc., can be improved. Successful suggestions are often recognised by a cash award from the employer.

The Income Tax (Earnings and Pensions) Act 2003, s. 321 exempts such awards to the extent that they do not exceed the permitted maximum, if three conditions are met, viz. that (ITEPA 2003, s. 323(3)–(5)):

the suggestion relates to the activities carried on by the employer;

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