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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 2 — Exemptions: mileage allowances and passenger payments

    115

 

Passenger payments

 233   Passenger payments

     (1)    No liability to income tax arises in respect of approved passenger payments

made to an employee for the use of a car or van (whether or not it is a company

vehicle) if—

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           (a)           the employee receives mileage allowance payments for the use of the

car or van, and

           (b)           the cash equivalent of the benefit of the car or van is treated as earnings

from the employment by virtue of section 120 or 154 (cars and vans as

benefits).

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            This is subject to subsection (2).

     (2)    The condition in subsection (1)(b) needs to be met only if the car or van is made

available to the employee by reason of the employment.

     (3)    Passenger payments are amounts paid to an employee because, while using a

car or van for business travel, the employee carries in it one or more passengers

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who are also employees for whom the travel is business travel.

     (4)    Passenger payments are approved if, or to the extent that, for a tax year, the

total amount of all such payments made to the employee does not exceed the

approved amount for such payments (see section 234).

     (5)    Section 117 (when cars and vans are made available by reason of employment)

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applies for the purposes of subsection (2).

 234   The approved amount for passenger payments

     (1)    The approved amount for passenger payments is—

            equation: cross[char[M],char[R]]

            where—

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                    M is the number of miles of business travel by the employee by car or

van—

                  (a)                 for which the employee carries in the tax year in question one or

more passengers who are also employees for whom the travel is

business travel, and

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                  (b)                 in respect of which passenger payments are made;

                    R is a rate of 5p per mile.

     (2)    If the employee carries for all or part of the tax year two or more passengers

who are also employees for whom the travel is business travel, the approved

amount for passenger payments is the total of the amounts calculated

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separately under subsection (1) in respect of each of those passengers.

     (3)    The Treasury may by regulations amend subsection (1) so as to alter the rate.

Supplementary

 235   Vehicles to which this Chapter applies

     (1)    This Chapter applies to cars, vans, motor cycles and cycles.

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Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 2 — Exemptions: mileage allowances and passenger payments

    116

 

     (2)    “Car” means a mechanically propelled road vehicle which is not—

           (a)           a goods vehicle,

           (b)           a motor cycle, or

           (c)           a vehicle of a type not commonly used as a private vehicle and

unsuitable to be so used.

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     (3)    “Van” means a mechanically propelled road vehicle which—

           (a)           is a goods vehicle, and

           (b)           has a design weight not exceeding 3,500 kilograms,

            and which is not a motor cycle.

     (4)    “Motor cycle” has the meaning given by section 185(1) of the Road Traffic Act

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1988 (c. 52).

     (5)    “Cycle” has the meaning given by section 192(1) of that Act.

     (6)    In this section—

                    “design weight” means the weight which a vehicle is designed or adapted

not to exceed when in normal use and travelling on a road laden;

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                    “goods vehicle” means a vehicle of a construction primarily suited for the

conveyance of goods or burden of any description.

 236    Interpretation of this Chapter

     (1)    In this Chapter—

                    “business travel” means travelling the expenses of which, if incurred and

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paid by the employee in question, would (if this Chapter did not apply)

be deductible under sections 337 to 342;

                    “mileage allowance payments” has the meaning given by section 229(2);

                    “passenger payments” has the meaning given by section 233(3).

     (2)    For the purposes of this Chapter a vehicle is a “company vehicle” in a tax year

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if in that year—

           (a)           the vehicle is made available to the employee by reason of the

employment and is not available for the employee’s private use, or

           (b)           the cash equivalent of the benefit of the vehicle is to be treated as the

employee’s earnings for the tax year by virtue of—

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                  (i)                 section 120 (benefit of car treated as earnings),

                  (ii)                section 154 (benefit of van treated as earnings), or

                  (iii)               section 203 (cash equivalent of benefit treated as earnings), or

           (c)           in the case of a car or van, the cash equivalent of the benefit of the car

or van would be required to be so treated if sections 167 and 168

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(exceptions for pooled cars and vans) did not apply, or

           (d)           in the case of a cycle, the cash equivalent of the benefit of the cycle

would be required to be treated as the employee’s earnings for the tax

year under Chapter 10 of Part 3 (taxable benefits: residual liability to

charge) if section 244(1) (exception for cycles made available) did not

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apply.

     (3)    Sections 117 and 118 (when cars and vans are made available by reason of

employment and are made available for private use) apply for the purposes of

subsection (2).

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 3 — Exemptions: other transport, travel and subsistence

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Chapter 3

Exemptions: other transport, travel and subsistence

 237   Parking provision and expenses

     (1)    No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable

benefits: residual liability to charge) in respect of the provision of workplace

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parking for an employee.

     (2)    No liability to income tax arises by virtue of the payment or reimbursement of

expenses incurred in connection with the provision for or the use by an

employee of workplace parking.

     (3)    In this section “workplace parking” means—

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           (a)           a car parking space,

           (b)           a motor cycle parking space, or

           (c)           facilities for parking a cycle other than a motor cycle,

            at or near the employee’s workplace.

 238    Modest private use of heavy goods vehicles

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     (1)    No liability to income tax arises where a heavy goods vehicle is made available

to an employee for the employee’s private use if conditions A and B are met.

     (2)    Condition A is that there is no transfer of the property in the vehicle to the

employee.

     (3)    Condition B is that the employee’s use of the vehicle in the tax year is not

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wholly or mainly private use.

     (4)    In this section—

                    “heavy goods vehicle” means a mechanically propelled road vehicle

which—

                  (a)                                     is of a construction primarily suited for the conveyance of goods

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or burden of any kind, and

                  (b)                                     is designed or adapted to have a maximum weight exceeding

3,500 kilograms when in normal use and travelling on a road

laden, and

                    “private use” means use other than for travel which the employee is

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necessarily obliged to do in the performance of the duties of the

employment.

 239   Payments and benefits connected with taxable cars and vans and exempt

heavy goods vehicles

     (1)    No liability to income tax arises in respect of the discharge of any liability of an

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employee in connection with a taxable car or van or an exempt heavy goods

vehicle.

     (2)    No liability to income tax arises in respect of a payment to an employee in

respect of expenses incurred by the employee in connection with a taxable car

or van or an exempt heavy goods vehicle.

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     (3)    Subsections (1) and (2) do not apply to liability arising by virtue of section 149

(benefit of car fuel treated as earnings).

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 3 — Exemptions: other transport, travel and subsistence

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     (4)    No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable

benefits: residual liability to charge) in respect of a benefit connected with a

taxable car or van or an exempt heavy goods vehicle.

     (5)    Subsection (4) does not apply to the provision of a driver.

     (6)    For the purposes of this section a car or van is “taxable” if under Chapter 6 of

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Part 3 the cash equivalent of the benefit of it is to be treated as the employee’s

earnings for the tax year.

     (7)    For the purposes of this section—

           (a)           “heavy goods vehicle” has the same meaning as in section 238(4)

(modest private use of heavy goods vehicles), and

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           (b)           a heavy goods vehicle is “exempt” if it is made available in the tax year

to the employee in such circumstances that section 238 applies.

     (8)    For the purposes of subsections (1) and (2), a heavy goods vehicle is also

“exempt” if it is so made available in such circumstances that section 238 would

apply if the employee were not in excluded employment.

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     (9)    In this Part “excluded employment” means an excluded employment within

the meaning of the benefits code (see section 63(4)).

 240   Incidental overnight expenses and benefits

     (1)    No liability to income tax arises in respect of a sum if or to the extent that it is

paid wholly and exclusively for the purpose of paying or reimbursing

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expenses which—

           (a)           are incidental to the employee’s absence from the place where the

employee normally lives,

           (b)           relate to a continuous period of such absence in relation to which the

overnight stay conditions are met (a “qualifying period”), and

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           (c)           would not be deductible under Part 5 if the employee incurred and paid

them and Chapter 2 of this Part (mileage allowances and passenger

payments) did not apply.

     (2)    No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable

benefits: residual liability to charge) in respect of a benefit provided for an

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employee if—

           (a)           its provision is incidental to such an absence during a qualifying

period, and

           (b)           no amount would be deductible in respect of it under Part 5.

     (3)    Subsections (1) and (2) are subject to section 241 (incidental overnight expenses

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and benefits: overall exemption limit).

     (4)    The overnight stay conditions are that—

           (a)           the employee is obliged to stay away from the place where the

employee normally lives throughout the period,

           (b)           the period includes at least one overnight stay away from that place,

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and

           (c)           each such overnight stay during the period is at a place the expenses of

travelling to which meet condition A or B.

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 3 — Exemptions: other transport, travel and subsistence

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     (5)    Condition A is that the expenses are deductible under Part 5 (otherwise than

under any of the excepted foreign travel provisions) or would be if the

employee incurred and paid them and Chapter 2 of this Part did not apply.

     (6)    Condition B is that the expenses are within section 250 or 255 (exemption of

work-related and individual learning account training provision) or would be

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if the employer paid or reimbursed them.

     (7)    In this section “excepted foreign travel provisions” means—

           (a)           section 371 (travel costs and expenses where duties performed abroad:

visiting spouse’s or child’s travel),

           (b)           section 374 (non-domiciled employee’s spouse’s or child’s travel costs

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and expenses where duties performed in UK), and

           (c)           section 376 (foreign accommodation and subsistence costs and

expenses (overseas employments)).

 241   Incidental overnight expenses and benefits: overall exemption limit

     (1)    Section 240(1) and (2) do not apply if the exemption provisions total in respect

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of the qualifying period in question exceeds the permitted amount.

     (2)    In this section “the exemption provisions total”, in respect of a period, means

the aggregate of—

           (a)           the amounts that would be exempted under section 240(1) and (2) in

respect of the period, apart from this section, and

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           (b)           the amounts that would be exempted under section 268 (exemption of

vouchers and tokens for incidental overnight expenses) in respect of the

period, apart from the condition in section 268(5).

     (3)    In this section “the permitted amount”, in respect of a period, means the

aggregate of the following amounts—

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           (a)           £5 for each night during the period spent wholly in the United

Kingdom, and

           (b)           £10 for each night during the period spent wholly or partly outside the

United Kingdom.

 242   Works transport services

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     (1)    No liability to income tax arises in respect of the provision for employees of a

works transport service if—

           (a)           the service is available generally to employees of the employer (or each

employer) concerned,

           (b)           the main use of the service is for qualifying journeys by those

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employees, and

           (c)           the service—

                  (i)                 is used only by the employees for whom it is provided or their

children, or

                  (ii)                is substantially used only by those employees or children.

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     (2)    In this section—

                    “children” includes stepchildren and illegitimate children but does not

include children aged 18 or over, and

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 3 — Exemptions: other transport, travel and subsistence

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                    “works transport service” means a service which is provided by means of

a bus or a minibus for conveying employees of one or more employers

on qualifying journeys.

     (3)    For the purposes of this section—

           (a)           “bus” means a road passenger vehicle which has a seating capacity of

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12 or more, and

           (b)           “minibus” means a vehicle constructed or adapted for the carriage of

passengers which has a seating capacity of 9, 10 or 11.

     (4)    But a vehicle which falls within the definition in subsection (3)(b) is not a

minibus for the purposes of this section if—

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           (a)           it has one or more disqualified seats, and

           (b)           excluding the disqualified seats, it has a seating capacity of 8 or less.

     (5)    For the purposes of subsections (3) and (4) the seating capacity of a vehicle is

determined in the same way as for the purposes of Part 3 of Schedule 1 to

VERA 1994 (vehicle excise duty on buses).

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            This applies whether or not the vehicle is a bus within the meaning of that Part

of that Schedule.

     (6)    For the purposes of subsection (4) a seat is disqualified if relevant construction

and use requirements are not met in relation to it.

            In this subsection “construction and use requirements” has the same meaning

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as in Part 2 of the Road Traffic Act 1988 (c. 52) or, in Northern Ireland, Part III

of the Road Traffic (Northern Ireland) Order 1995 (S.I. 1995/2994 (N.I. 18)).

 243   Support for public bus services

     (1)    No liability to income tax arises in respect of the provision of financial or other

support for a public transport road service if—

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           (a)           in the case of a local bus service, conditions A and B are met, or

           (b)           in any other case, conditions A to C are met.

     (2)    Condition A is that the service is used by employees of one or more employers

for qualifying journeys.

     (3)    Condition B is that the service is available generally to employees of the

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employer (or each employer) concerned.

     (4)    Condition C is that the terms on which the service is available to the employees

of the employer (or each employer) concerned are not more favourable than

those available to other passengers.

     (5)    In this section—

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                    “local bus service” means a local service (as defined in section 2 of the

Transport Act 1985 (c. 67)), and

                    “public transport road service” means a public passenger transport

service provided by means of a road vehicle.

 244   Cycles and cyclist’s safety equipment

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     (1)    No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable

benefits: residual liability to charge) in respect of the provision for an employee

of a cycle or cyclist’s safety equipment if conditions A to C are met.

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 3 — Exemptions: other transport, travel and subsistence

    121

 

     (2)    Condition A is that there is no transfer of the property in the cycle or

equipment in question.

     (3)    Condition B is that the employee uses the cycle or equipment in question

mainly for qualifying journeys.

     (4)    Condition C is that cycles are available generally to employees of the employer

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concerned or, as the case may be, cyclist’s safety equipment is so available to

them.

     (5)    In this section “cycle” has the meaning given by section 192(1) of the Road

Traffic Act 1988 (c. 52), and “cyclist” has a corresponding meaning.

 245   Travelling and subsistence during public transport strikes

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     (1)    No liability to income tax arises in respect of the following benefits and

payments where a strike or other industrial action disrupts a public transport

service normally used by an employee.

     (2)    They are—

           (a)           the provision for the employee of overnight accommodation at or near

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the employee’s permanent workplace,

           (b)           a payment to the employee in respect of expenses incurred by the

employee in connection with such accommodation,

           (c)           the provision for the employee of transport for the purpose of ordinary

commuting or travel between any two places that is for practical

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purposes substantially ordinary commuting, and

           (d)           a payment to the employee in respect of expenses incurred on such

transport.

 246   Transport between work and home for disabled employees: general

     (1)    No liability to income tax arises in respect of—

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           (a)           the provision of transport for a disabled employee, or

           (b)           the payment or reimbursement of expenses incurred on such transport,

            if the condition in subsection (2) is met.

     (2)    The condition is that the transport is provided or the expenses are incurred for

the purpose of ordinary commuting or travel between any two places that is

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for practical purposes substantially ordinary commuting.

     (3)    Subsection (1) does not apply in a case where a car is made available to a

disabled employee (but see section 247).

     (4)    In this section “disabled employee” means an employee who has a physical or

mental impairment with a substantial and long-term adverse effect on the

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employee’s ability to carry out normal day to day activities.

 247   Provision of cars for disabled employees

     (1)    This section applies where a car is made available to a disabled employee

without any transfer of the property in it.

     (2)    No liability to income tax arises by virtue of Chapter 6 or 10 of Part 3 (taxable

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benefits: cars, vans etc. and residual liability to charge) in respect of the benefit

if conditions A to C are met.

 

 

 
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