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Income Tax (Earnings and Pensions) Bill


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

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 282   Exclusion from section 281 of benefits and expenses where deduction allowed

     (1)    Benefits and expenses are excluded from section 281 (travelling and

subsistence) if or to the extent that an amount is deductible in respect of the cost

of the benefits or of the expenses under any of the following provisions.

     (2)    They are—

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           (a)           section 341 (travel at start or finish of overseas employment),

           (b)           section 342 (travel between employments where duties performed

abroad), and

           (c)           Chapter 5 of Part 5 except section 376 (deductions for earnings

representing benefits or reimbursed expenses in respect of certain

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foreign travel).

     (3)    If an amount is so deductible in respect of part only of the cost of a benefit, the

part of the benefit excluded by this section is to be determined on a just and

reasonable basis.

 283   Exclusion from section 281 of taxable car and van facilities

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     (1)    A car or van is not treated as a facility for the purposes of section 281(1) if in the

tax year in which it is provided it is also made available—

           (a)           to the employee or members of the employee’s family or household for

private use not falling within section 281(1),

           (b)           by reason of the employee’s employment, and

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           (c)           without any transfer of the property in it.

     (2)    The following sections apply for the purposes of this section as they apply for

the purposes of Chapter 6 of Part 3 (taxable benefits: cars, vans and related

benefits)—

           (a)           section 115 (meaning of “car” and “van”),

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           (b)           section 117 (meaning of car or van made available by reason of

employment), and

           (c)           section 118 (availability for private use).

 284   Bridging loan expenses

     (1)    Expenses are within this section if—

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           (a)           the employee has an interest in the former residence and disposes of it

because of the change of residence,

           (b)           the employee acquires an interest in the new residence, and

           (c)           the expenses are interest payable by the employee in respect of a loan

raised by the employee wholly or partly because expenditure is

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incurred in connection with that acquisition before the proceeds of that

disposal become available.

            This is subject to subsections (2) and (3).

     (2)    Interest is only within this section if or to the extent that the loan is used—

           (a)           for acquiring the employee’s interest in the new residence, or

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           (b)           for redeeming a loan—

                  (i)                 which was raised by the employee to obtain an interest in the

former residence,

                  (ii)                which is secured on such an interest, or

 

 

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

    140

 

                  (iii)               which was partly so raised and the rest of which is so secured.

     (3)    If the loan exceeds the market value of the employee’s interest in the former

residence at the time of acquisition of the new residence, the interest on the

excess is not within this section.

     (4)    If subsection (3) applies in a case where the loan is used partly for purposes

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within subsection (2) and partly for other purposes, the amount of the interest

within this section is the appropriate fraction of the total interest.

     (5)    The appropriate fraction is—equation: over[times[char[M],char[V]],char[L]]

            or, if it is smaller—equation: over[times[char[P],char[L]],char[L]]

            where—

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                    MV is the market value of the employee’s interest in the former residence

at the time of acquisition of the new residence,

                    PL is the part of the loan used for purposes within subsection (2), and

                    L is the amount of the loan.

     (6)    In this section—

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           (a)           references to a loan raised by the employee include a loan raised by—

                  (i)                 one or more members of the employee’s family or household, or

                  (ii)                the employee and one or more members of the employee’s

family or household, and

           (b)           references to the employee having, disposing of or acquiring an interest

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in a residence include—

                  (i)                 one or more members of the employee’s family or household

having, disposing of or acquiring such an interest, or

                  (ii)                the employee and one or more members of the employee’s

family or household having, disposing of or acquiring such an

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interest.

 285   Replacement of domestic goods

     (1)    Benefits and expenses are within this section if—

           (a)           the employee has an interest in the former residence and disposes of it

because of the change of residence,

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           (b)           the employee acquires an interest in the new residence,

           (c)           in the case of benefits, they are domestic goods provided to replace

goods used at the former residence which are unsuitable for use at the

new residence, and

           (d)           in the case of expenses, they are incurred on the purchase of domestic

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goods intended for such replacement.

     (2)    In this section references to the employee having, disposing of or acquiring an

interest in a residence include—

           (a)           one or more members of the employee’s family or household having,

disposing of or acquiring such an interest, or

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           (b)           the employee and one or more members of the employee’s family or

household having, disposing of or acquiring such an interest.

 

 

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

    141

 

 286   Power to amend sections 279 to 285

     (1)    The Treasury may by regulations amend sections 279 to 285 so as to secure that

benefits or expenses which would not otherwise fall within any of those

sections do so.

     (2)    The regulations may include such supplementary, incidental or consequential

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provisions as appear to the Treasury to be necessary or expedient.

     (3)    Those provisions may be made by amending this Chapter or otherwise.

     (4)    The regulations apply to a change of an employee’s residence resulting from

an employment change occurring on or after the day specified in the

regulations for this purpose.

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Limit on exemption

 287   Limit on exemption

     (1)    If in the case of any change of residence the value of the exemption exceeds

£8,000, section 271 (exemption for removal benefits and expenses) does not

apply to the excess.

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     (2)    The value of the exemption is an amount equal to the sum of—

           (a)           the section 62 earnings, and

           (b)           the benefits code earnings (after taking account of section 64(2)(b)

where otherwise an amount that falls within paragraph (a) would be

included).

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     (3)    In this section “the section 62 earnings” means all earnings within section 62

(earnings) in respect of which section 271 would prevent liability to income tax

from arising if this section were disregarded.

     (4)    In this section “the benefits code earnings” means all earnings—

           (a)           which are treated as such under the benefits code (except earnings so

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treated under Chapter 7 of Part 3 (taxable benefits: loans)), and

           (b)           in respect of which section 271 would prevent liability to income tax

from arising if this section were disregarded.

     (5)    In the case of living accommodation, the amount that would be so treated is to

be taken to be equal to—equation: plus[times[char[C],char[E]],minus[char[D]]]

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            where—

                    CE is the cash equivalent of the accommodation under Chapter 5 of Part

3 (taxable benefits: living accommodation) for the period in which the

accommodation is provided (calculated as mentioned in section 103),

and

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                    D is any amount deductible under section 364 (deductions where living

accommodation provided).

 

 

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

    142

 

Special exemption and relief for bridging loans

 288   Limited exemption of certain bridging loans connected with employment

moves

     (1)    No liability to income tax arises by virtue of Chapter 7 of Part 3 (taxable

benefits: loans) in respect of a loan if—

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           (a)           it is a removal benefit (see subsection (2)),

           (b)           the unused removal benefit exemption condition is met (see subsection

(3)), and

           (c)           the loan is discharged before the end of the exempted loan discharge

period (see subsection (4)).

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     (2)    For the purposes of this section and section 289, a loan is a removal benefit if—

           (a)           it is raised by the employee in connection with a change of residence

meeting the conditions in section 273 (conditions applicable to change

of residence),

           (b)           the employee has an interest in the former residence and disposes of it

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in consequence of the change of residence,

           (c)           the employee acquires an interest in the new residence,

           (d)           the loan is raised wholly or partly because expenditure is incurred in

connection with that acquisition before the proceeds of that disposal

become available, and

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           (e)           the loan is made before the limitation day.

     (3)    For the purposes of this section and section 289 the unused removal benefit

exemption condition is that, in the case of the particular change of residence—

           (a)           the sum specified in section 287(1) (limit on exemption), exceeds

           (b)           the amount referred to in section 287(2) (the value of the exemption);

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            and for those purposes that excess is “the unused exemption”.

     (4)    In this section and section 289 “the exempted loan discharge period”, in

relation to a loan, means the period of N days beginning with the day on which

it is made, taking N as the number obtained by applying the following formula

and, if that does not give a whole number, rounding up the result to the nearest

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whole number—equation: cross[over[char[A],cross[char[B],char[C]]],num[365.00000000,"365"]]

            where—

                    A is the unused exemption,

                    B is the maximum amount of the loan outstanding in the period beginning

with the time when the loan is made and ending with the limitation

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day, and

                    C is the official rate of interest in force when the loan is made (expressed

as a percentage).

     (5)    In this section—

           (a)           references to a loan raised by the employee include a loan raised by—

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                  (i)                 one or more members of the employee’s family or household, or

                  (ii)                the employee and one or more members of the employee’s

family or household, and

           (b)           references to the employee having, disposing of or acquiring an interest

in a residence include—

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Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 8 — Exemptions: special kinds of employees

    143

 

                  (i)                 one or more members of the employee’s family or household

having, disposing of or acquiring such an interest, or

                  (ii)                the employee and one or more members of the employee’s

family or household having, disposing of or acquiring such an

interest.

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     (6)    The tax payable in respect of a loan for a tax year ending before the limitation

day may be decided on the basis that the unused removal benefit exemption

condition will not be met.

 289   Relief for certain bridging loans not qualifying for exemption under section

288

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     (1)    This subsection applies to a loan if—

           (a)           it is a removal benefit (see section 288(2)),

           (b)           the unused removal benefit exemption condition is met (see section

288(3)), and

           (c)           the loan is not discharged before the end of the exempted loan

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discharge period (see section 288(4)).

     (2)    A loan to which subsection (1) applies is to be treated for the purposes of

Chapter 7 of Part 3 (taxable benefits: loans) as if it was made on the day after

the last day of the exempted loan discharge period.

     (3)    Subsection (2) does not apply for the purposes of sections 176, 177, 180, 189 and

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190.

     (4)    The tax payable in respect of a loan for a tax year ending before the limitation

day may be decided on the basis that subsections (1) and (2) will not apply

because the unused removal benefit exemption condition will not be met.

Chapter 8

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Exemptions: special kinds of employees

Ministers of religion

 290   Accommodation benefits of ministers of religion

     (1)    No liability to income tax in respect of a person employed as a full-time

minister arises by virtue of—

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           (a)           the payment or reimbursement of a statutory amount payable in

connection with qualifying premises, or

           (b)           the reimbursement of a statutory deduction made in connection with

qualifying premises.

     (2)    No liability to income tax in respect of a person employed as a full-time

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minister arises by virtue of the payment or reimbursement of expenses

incurred in connection with providing living accommodation in qualifying

premises if the employment is excluded employment.

     (3)    Subsection (1) does not apply if or to the extent that the amount or deduction

is properly attributable to a part of the premises for which the minister receives

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rent.

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 8 — Exemptions: special kinds of employees

    144

 

     (4)    Premises are qualifying premises in relation to a person employed as a minister

if—

           (a)           an interest in them belongs to a charity or an ecclesiastical corporation,

and

           (b)           because of that interest and by reason of holding the employment, the

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minister has a residence in them from which to perform the duties of

the employment.

     (5)    In this section—

                    “charity” means a body of persons or trust established for charitable

purposes only,

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                    “full-time minister” means a person in full-time employment as a minister

of a religious denomination,

                    “statutory amount” means an amount paid in pursuance of a provision in,

or having the force of, an Act, and

                    “statutory deduction” means a deduction made in pursuance of such a

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provision.

MPs, government ministers etc.

 291   Termination payments to MPs and others ceasing to hold office

     (1)    No liability to income tax in respect of earnings arises by virtue of any grant or

payment to which this section applies (but see Chapter 3 of Part 6: payments

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and benefits on termination of employment etc.).

     (2)    This section applies to grants and payments—

           (a)           made in accordance with a resolution of the House of Commons to a

person ceasing to be a Member of that House on a dissolution of

Parliament,

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           (b)           made under section 4 of the Ministerial and other Pensions and Salaries

Act 1991 (c. 5) (grants to persons ceasing to hold certain Ministerial and

other offices),

           (c)           made under section 3 of the European Parliament (Pay and Pensions)

Act 1979 (c. 50) (resettlement grants for persons ceasing to be

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Representatives),

           (d)           made under section 81(3) of the Scotland Act 1998 (c. 46) to a person—

                  (i)                 ceasing to be a member of the Scottish Parliament on its

dissolution, or

                  (ii)                ceasing to hold an office corresponding to a relevant office,

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           (e)           made under section 18(1) of the Government of Wales Act 1998 (c. 38)

to a person ceasing to be a member of the National Assembly for Wales

on the expiry of the member’s term of office, or

           (f)           made under section 48(1) of the Northern Ireland Act 1998 (c. 47) to a

person—

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                  (i)                 ceasing to be a member of the Northern Ireland Assembly on its

dissolution, or

                  (ii)                ceasing to hold an office corresponding to a relevant office.

     (3)    In this section “a relevant office” has the same meaning as in section 4 of the

Ministerial and other Pensions and Salaries Act 1991 .

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