As shown at EIM01120, for periods up to 5 April 2018 HMRC allowed payments of financial loss allowance (FLA) that compensated for loss of earnings to be exempt from income tax by extra-statutory concession.
From 6 April 2018, section 299A of ITEPA 2003 provides a statutory exemption from income tax on payments made to voluntary office-holders where those payments are made solely to compensate the person for lost employment income.
The exemption applies where:
•a person holds a voluntary office with a relevant authority
•they carry out duties of the office in a period in which they are also employed