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On 1 July 2005, a company marks a director’s retirement by giving him a car valued at £25,000. The receipt falls before 6 April 2006 so the rules relating to non-approved schemes apply and not the rules relating to employer-financed schemes (see EIM15010).

The receipt is in non-cash form and so is not a ‘relevant benefit� for that purpose (see EIM15403 and EIM15421). It follows that the receipt is not from a non-approved “retirement benefits scheme� as defined in EIM15402. So no charge under s394 ITEPA 2003 arises.

If, as well as giving the car, the employer gave cash, then the scheme would include a ‘‘relevant benefit’� - because the cash is a lump sum given on retirement (see the definition in EIM15402). Because the scheme includes a ‘relevant benefit� (the cash lump sum) it is within the definition of a non-approved retirement benefits scheme. It follows that Section 394 ITEPA 2003 taxes both the cash and the value of the car (see EIM15421 for guidance on determining that value).