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Introduction

Third party benefits are those provided to an employee by someone other than their employer. Viewed from the provider’s perspective, they are benefits provided to employees of another employer.

This is an area which can cause practical difficulties as there can be implications for the provider of the benefit, the employer of the employee who has received the benefit, and the employee. Communication between the provider and the employer is often required in order to determine the correct tax, NIC and reporting requirements. No charge to tax arises on the individual who is provided with a form of entertainment or hospitality as long as the third party is not seeking to reward the individual in some way for past or future services in the course of their employment. This exemption is derived from ITEPA 2003, s 265. However, often a benefit is provided as a reward, for example this is common for people in sales who receive rewards from manufacturers. Such rewards may take