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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 5 — Exemptions: recreational benefits

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                  (b)                                     land or other premises belonging to, or enjoyed with, premises

so used, and

                    “vehicle” includes a ship, boat or other vessel, an aircraft and a hovercraft.

 263   Power to alter benefits to which section 261 applies

The Treasury may by regulations provide that section 261

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           (a)           does not apply to a benefit specified in the regulations,

           (b)           applies to a benefit so specified only where such conditions as the

regulations specify are met in relation to the terms on which, and the

persons to whom, it is provided, or

           (c)           applies in such cases as are so specified to—

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                  (i)                 facilities that do not meet the conditions in section 261(3) to (5),

or

                  (ii)                a benefit within section 262.

Annual parties and functions

 264   Annual parties and functions

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     (1)    This section applies to an annual party or similar annual function provided for

an employer’s employees and available to them generally or available

generally to those at a particular location.

     (2)    Where in the tax year only one annual party or similar annual function to

which this section applies is provided for the employer’s employees, or the

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employees in question, no liability to income tax arises in respect of its

provision if the cost per head of the party or function does not exceed £75.

     (3)    Where in the tax year two or more such parties or functions are so provided,

no liability to income tax arises in respect of the provision of one or more of

them (“the exempt party or parties”) if the cost per head of the exempt party or

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parties does not exceed £75 or £75 in aggregate.

     (4)    For the purposes of this section, the cost per head of a party or function is the

total cost of providing—

           (a)           the party or function, and

           (b)           any transport or accommodation incidentally provided for persons

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attending it (whether or not they are the employer’s employees),

            divided by the number of those persons.

     (5)    That total cost includes any value added tax on the expenses incurred in

providing the party, function, transport or accommodation.

Entertainment

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 265   Third party entertainment

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

an employee or a member of the employee’s family or household if conditions

A to C are met.

     (2)    Condition A is that the person providing the entertainment is not the employer

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or a person connected with the employer.

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 6 — Exemptions: non-cash vouchers and credit-tokens

    130

 

     (3)    Condition B is that neither the employer nor a person connected with the

employer has directly or indirectly procured its provision.

     (4)    Condition C is that it is not provided—

           (a)           in recognition of particular services performed by the employee in the

course of the employment, or

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           (b)           in anticipation of particular services to be so performed.

     (5)    In this section “entertainment” includes hospitality of any kind.

Chapter 6

Exemptions: non-cash vouchers and credit-tokens

General exemptions: use for exempt benefits

10

 266   Exemption of non-cash vouchers for exempt benefits

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

benefits: vouchers and credit-tokens) in respect of a non-cash voucher if or to

the extent that the voucher is used to obtain anything the direct provision of

which would fall within—

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           (a)           section 237(1) (parking provision),

           (b)           section 246 (transport between home and work for disabled employees:

general),

           (c)           section 247 (provision of cars for disabled employees),

           (d)           section 248 (transport home: late night working and failure of car-

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sharing arrangements), or

           (e)           section 265 (third party entertainment).

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

benefits: vouchers and credit-tokens) in respect of a non-cash voucher if the

voucher evidences the employee’s entitlement to use anything the direct

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provision of which would fall within—

           (a)           section 242 (works transport services),

           (b)           section 243 (support for public bus services), or

           (c)           section 244 (cycles and cyclist’s safety equipment).

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

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benefits: vouchers and credit-tokens) in respect of a non-cash voucher if the

voucher can only be used to obtain anything the direct provision of which

would fall within—

           (a)           section 245 (travelling and subsistence during public transport strikes),

           (b)           section 261 (exemption of recreational benefits),

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           (c)           section 264 (annual parties and functions),

           (d)           section 296 (armed forces’ leave travel facilities), or

           (e)           section 317 (subsidised meals).

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

benefits: vouchers and credit-tokens) in respect of a non-cash voucher if the

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voucher evidences the employee’s entitlement to a benefit in respect of which

no charge arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 6 — Exemptions: non-cash vouchers and credit-tokens

    131

 

     (4)    liability to charge) because of regulations under section 210 (power to exempt

minor benefits).

     (5)    For the purposes of this section direct provision is taken to fall within a section

if it would do so if the employee were not in excluded employment.

 267   Exemption of credit-tokens used for exempt benefits

5

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

benefits: vouchers and credit-tokens) in respect of a credit-token if or to the

extent that the token is used to obtain anything the direct provision of which—

           (a)           would fall within one of the provisions specified in subsection (2), or

           (b)           would do so if the employee were not in excluded employment.

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     (2)    Those provisions are—

           (a)           section 237(1) (parking provision),

           (b)           section 245 (travelling and subsistence during public transport strikes),

           (c)           section 246 (transport between home and work for disabled employees:

general),

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           (d)           section 247 (provision of cars for disabled employees),

           (e)           section 248 (transport home: late night working and failure of car-

sharing arrangements), and

           (f)           section 265 (third party entertainment).

Exemptions for particular non-cash vouchers and credit-tokens

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 268   Exemption of vouchers and tokens for incidental overnight expenses

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

benefits: vouchers and credit-tokens) in respect of a non-cash voucher or a

credit-token if or to the extent that the voucher or token is used by an employee

to obtain goods, services or money if conditions A to C are met.

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     (2)    In the case of goods or services, condition A is that—

           (a)           obtaining them is incidental to the employee’s absence from the place

where the employee normally lives, and

           (b)           that absence is for a continuous period in relation to which the

overnight stay conditions are met (“the qualifying period”).

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     (3)    In the case of money, condition A is that—

           (a)           it is obtained for the purpose of obtaining goods or services, and

           (b)           obtaining them is incidental to such an absence during such a period.

     (4)    Condition B is that an amount would not be deductible under section 362 or

363 (deductions where non-cash voucher or credit-token provided) in respect

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of the cost of obtaining the goods or services.

     (5)    Condition C is that the exemption provisions total in respect of the qualifying

period does not exceed the permitted amount.

     (6)    In this section—

                    “the overnight stay conditions” has the same meaning as in section 240

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(exemption of incidental overnight expenses and benefits) (see section

240(4)), and

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 6 — Exemptions: non-cash vouchers and credit-tokens

    132

 

                    “the exemption provisions total” and “the permitted amount” have the

same meaning as in section 241 (incidental overnight expenses and

benefits: overall exemption limit) (see section 241(2) and (3)).

 269   Exemption where benefits or money obtained in connection with taxable car

or van or exempt heavy goods vehicle

5

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

benefits: vouchers and credit-tokens) in respect of a non-cash voucher or a

credit-token if or to the extent that the voucher or token is used by the

employee or a member of the employee’s family for obtaining—

           (a)           goods or services in connection with a taxable car or van or an exempt

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heavy goods vehicle, or

           (b)           money which is spent on such goods or services.

     (2)    Subsection (1) applies where the goods in question are fuel for a car, but see

section 149(3) (by virtue of which such use of a voucher or token is treated as

the provision of the fuel for the purposes of section 149 (benefit of car fuel

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treated as earnings)).

     (3)    For the purposes of this section—

           (a)           “car” and “van” have the meaning given by section 115, and

           (b)           a car or van is “taxable” if the cash equivalent of the benefit of it is

treated as the employee’s earnings for the tax year in which the voucher

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or token is used under Chapter 6 of Part 3 (taxable benefits: cars, vans

and related benefits).

     (4)    For the purposes of this section—

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

would apply if the employee were not in excluded employment.

 270   Exemption for small gifts of vouchers and tokens from third parties

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

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benefits: vouchers and credit-tokens) in respect of a non-cash voucher or a

credit-token if conditions A to C are met.

     (2)    Condition A is that the voucher or token is provided as a gift.

     (3)    Condition B is that it is only capable of being used to obtain goods.

     (4)    Condition C is that it meets conditions A to C and E in section 324 (general

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exemption of small gifts from third parties).

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 7 — Exemptions: removal benefits and expenses

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Chapter 7

Exemptions: removal benefits and expenses

Exemption of removal benefits and expenses: general

 271   Limited exemption of removal benefits and expenses: general

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

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           (a)           the provision of removal benefits to which this section applies, or

           (b)           the payment or reimbursement of removal expenses to which this

section applies.

     (2)    Subsection (1) does not apply if (disregarding this section) the earnings are

general earnings to which either of the following sections applies—

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           (a)           section 22 (chargeable overseas earnings for year when employee

resident and ordinarily resident, but not domiciled, in UK), or

           (b)           section 26 (foreign earnings for year when employee resident, but not

ordinarily resident, in UK).

     (3)    Subsection (1) is subject to section 287 (limit on exemption).

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 272   Removal benefits and expenses to which section 271 applies

     (1)    Benefits are removal benefits to which section 271 applies if—

           (a)           they are reasonably provided in connection with a change of the

employee’s residence which meets the conditions in section 273,

           (b)           they are provided on or before the limitation day (see section 274), and

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           (c)           they are within subsection (2) or one of the following provisions—

                  (i)                 section 277 (acquisition benefits and expenses),

                  (ii)                section 278 (abortive acquisition benefits and expenses),

                  (iii)               section 279 (disposal benefits and expenses),

                  (iv)                section 280 (transporting belongings),

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                  (v)                 section 281 (travelling and subsistence),

                  (vi)                section 285 (replacement of domestic goods).

     (2)    A benefit is within this subsection if it is a non-cash voucher, cash voucher or

credit-token used—

           (a)           to obtain goods or services the direct provision of which would be a

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benefit within one of the provisions specified in subsection (1)(c)(i) to

(vi), or

           (b)           to obtain money for the purpose of obtaining such goods or services or

meeting expenses within one of those provisions or section 284

(bridging loan expenses).

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     (3)    Expenses are removal expenses to which section 271 applies if—

           (a)           they are reasonably incurred by the employee in connection with a

change of the employee’s residence which meets the conditions in

section 273,

           (b)           they are incurred on or before the limitation day, and

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           (c)           they are within one of the provisions referred to in subsection (1)(c)(i)

to (vi) or within section 284 (bridging loan expenses).

 

 

 
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Revised 17 February 2003