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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 11 — Miscellaneous exemptions

    159

 

           (c)           is a child in respect of whom the employee has all the rights, duties,

powers, responsibilities and authority which by law a parent of a child

has in relation to the child and the child’s property.

            In paragraph (a) “child” includes stepchild.

     (4)    Condition B is that—

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           (a)           the premises on which the care is provided are not used wholly or

mainly as a private dwelling, and

           (b)           any applicable registration requirement is met with respect to the

premises.

     (5)    In subsection (4), “registration requirement” means a requirement that a

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person providing the care is registered under—

           (a)           section 71 or Part 10A of the Children Act 1989 (c. 41), or

           (b)           Article 118 of the Children (Northern Ireland) Order 1995 (S.I.1995/755

(N.I. 2)),

            with respect to premises.

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     (6)    Condition C is that—

           (a)           the premises on which the care is provided are made available by the

employer alone, or

           (b)           the care requirements are met.

     (7)    The care requirements are that—

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           (a)           the care is provided under arrangements made by persons who include

the employer,

           (b)           the premises on which it is provided are made available by one or more

of those persons, and

           (c)           under the arrangements the employer is wholly or partly responsible

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for financing and managing the provision of the care.

     (8)    In this section “care” means—

           (a)           any form of care, and

           (b)           any form of supervised activity which is not provided primarily for

education purposes.

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Telephones and computer equipment

 319   Mobile telephones

     (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

or a member of the employee’s family or household of a mobile telephone

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without any transfer of property in it.

     (2)    In this section “mobile telephone” means telephone apparatus which—

           (a)           is not physically connected to a land-line, and

           (b)           is not a cordless telephone or a telepoint telephone.

     (3)    For the purposes of subsection (2)—

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                    “cordless telephone” means telephone apparatus designed or adapted to

provide a wireless extension to a telephone and used only as such an

extension to a telephone which is physically connected to a land-line,

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 11 — Miscellaneous exemptions

    160

 

                    “telephone apparatus” means wireless telegraphy apparatus designed or

adapted for the purpose of transmitting and receiving spoken messages

and connected to a public telecommunication system (as defined in

section 9(1) of the Telecommunications Act 1984 (c. 12)), and

                    “telepoint telephone” means telephone apparatus used for the purpose of

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a short-range radio communications service at frequencies between 864

and 868 megahertz (inclusive).

 320   Limited exemption for computer equipment

     (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 computer

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equipment if conditions A to C are met.

     (2)    Condition A is that the equipment is made available to the employee or to a

member of the employee’s family or household without any transfer of

property in it.

     (3)    Condition B is that the arrangements under which computer equipment is

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made available to employees of the employer, or to members of their families

or households, do not favour directors (see subsection (6)).

     (4)    Condition C is that the aggregate cash equivalent of the benefit of the provision

of such equipment in the tax year does not exceed £500.

     (5)    If conditions A and B are met, but condition C is not, the employee is only liable

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to income tax in the tax year by virtue of Chapter 10 of Part 3 on so much of that

aggregate cash equivalent as exceeds £500.

     (6)    The arrangements referred to in condition B are only taken to favour directors

if—

           (a)           the only such arrangements are arrangements under which the

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employee is required to be a director of a company, or

           (b)           taking all such arrangements together, the terms on which the

equipment is made available are more favourable in some or all cases

where the employee is a director than in one or more cases where the

employee is not.

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     (7)    In this section—

           (a)           “computer equipment” includes printers, scanners, modems, discs and

other peripheral devices designed to be used by being connected to or

inserted in a computer,

           (b)           “director” has the meaning given by section 67(1),

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           (c)           references to making computer equipment available—

                  (i)                 include references to the provision, together with any computer

equipment made available, of a right to use computer software,

but

                  (ii)                do not include references to the provision of access to, or the use

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of, any public telecommunication system, and

           (d)           “public telecommunication system” has the same meaning as in the

Telecommunications Act 1984 (c. 12) (see section 9(1)).

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 11 — Miscellaneous exemptions

    161

 

Awards and gifts

 321   Suggestion awards

     (1)    This section applies where an employer establishes a scheme for the making of

suggestions that is open on the same terms—

           (a)           to employees of the employer generally, or

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           (b)           to a particular description of them.

     (2)    No liability to income tax arises in respect of an encouragement award or

financial benefit award made under the scheme for a suggestion which meets

conditions A to C if, or to the extent that, it does not exceed the permitted

maximum for the award under section 322.

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     (3)    Condition A is that the suggestion relates to the activities carried on by the

employer.

     (4)    Condition B is that the suggestion is made by an employee who could not

reasonably be expected to make it in the course of the duties of the

employment, having regard to the employee’s experience.

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     (5)    Condition C is that the suggestion is not made at a meeting held for the

purpose of proposing suggestions.

     (6)    In this section and section 322

                    “encouragement award” means an award, other than a financial benefit

award, made for a suggestion with intrinsic merit or showing special

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effort, and

                    “financial benefit award” means an award for a suggestion relating to an

improvement in efficiency or effectiveness which the employer has

decided to adopt and reasonably expects will result in a financial

benefit.

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 322   Suggestion awards: “the permitted maximum”

     (1)    The permitted maximum for an encouragement award for the purposes of

section 321 (suggestion awards) is £25.

     (2)    The permitted maximum for a financial benefit award where no such award

for the suggestion has been made before is—

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           (a)           if only one such award is made for the suggestion, the suggestion

maximum, and

           (b)           if two or more such awards are made on the same occasion to different

persons for the suggestion, the appropriate proportion of the

suggestion maximum.

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     (3)    If on a later occasion or occasions one or more further such awards are made

for the same suggestion, the permitted maximum for each is—

           (a)           if only one such award is made for the suggestion on that occasion, the

residue of the suggestion maximum, and

           (b)           if two or more such awards are made on the same occasion to different

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persons for the suggestion, the appropriate proportion of that residue.

     (4)    The suggestion maximum for a financial benefit award is the financial benefit

share or £5000 if that is less.

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 11 — Miscellaneous exemptions

    162

 

     (5)    In subsection (4) “the financial benefit share” means the greater of—

           (a)           half the financial benefit reasonably expected to result from the

adoption of the suggestion for the first year after its adoption, and

           (b)           one-tenth of the financial benefit reasonably expected to result from its

adoption for the first 5 years after its adoption.

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     (6)    In this section—

                    “the appropriate proportion” means such proportion as the award bears

to the total of the financial benefit awards made on the same occasion

for the suggestion,

                    “the residue of the suggestion maximum” means the suggestion

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maximum less the total previous exemption, and

                    “the total previous exemption” means the total of the amounts exempted

from income tax under section 321 in respect of financial benefit awards

for the suggestion made on previous occasions.

 323   Long service awards

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     (1)    No liability to income tax arises in respect of a long service award which meets

the condition in subsection (3) if or to the extent that the chargeable amount

does not exceed the permitted maximum.

     (2)    In subsection (1)—

                    “chargeable amount” means the amount of employment income which

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would be charged to tax in respect of the award apart from subsection

(1),

                    “long service award” means an award made to an employee to mark not

less than 20 years’ service with the same employer, and

                    “permitted maximum” means £20 for each year of service in respect of

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which the award is made.

     (3)    The condition is that the award must take the form of—

           (a)           tangible moveable property,

           (b)           shares in a company which is, or belongs to the same group as, the

employer, or

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           (c)           the provision of any other benefit except—

                  (i)                 a payment,

                  (ii)                a cash voucher,

                  (iii)               a credit-token,

                  (iv)                securities,

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                  (v)                 shares not within paragraph (b), or

                  (vi)                an interest in or rights over securities or shares.

     (4)    Subsection (1) does not apply to an award (“the later award”) if another award

to mark a particular period of service with the same employer has been made

to the employee in the period of 10 years ending with the date on which the

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later award is made.

     (5)    For the purposes of this section, service is treated as being with the same

employer if it is with two or more employers—

           (a)           each of whom is a successor or predecessor of the others, or

           (b)           one of whom is a company which belongs or has belonged to the same

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group as the others or a predecessor or successor of the others.

 

 

Income Tax (Earnings and Pensions) Bill
Part 4 — Employment income: exemptions
Chapter 11 — Miscellaneous exemptions

    163

 

     (6)    In this section “group” means a body corporate and its 51% subsidiaries.

 324   Small gifts from third parties

     (1)    No liability to income tax arises in respect of a gift provided for an employee

or a member of the employee’s family or household if conditions A to E are

met.

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     (2)    Condition A is that the gift is not provided by the employer or a person

connected with the employer.

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

employer has directly or indirectly procured the gift.

     (4)    Condition C is that the gift is not made in recognition of particular services

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performed by the employee in the course of the employment or in anticipation

of such services.

     (5)    Condition D is that the gift is not cash or securities or the use of a service.

     (6)    Condition E is that the total cost to the donor of all the eligible gifts in respect

of the employee in question during the tax year does not exceed £150.

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     (7)    For the purposes of condition E, the total cost to the donor includes any value

added tax payable on the supply of the gifts to the donor, whether or not the

donor is entitled to a credit or repayment in respect of that tax.

     (8)    In this section “eligible gifts” means all gifts which—

           (a)           meet conditions A to D, or

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           (b)           are non-cash vouchers or credit-tokens and meet—

                  (i)                 conditions A to C, and

                  (ii)                conditions A and B in section 270 (exemption for small gifts of

vouchers and tokens from third parties).

     (9)    Subsection (1) does not apply to non-cash vouchers and credit-tokens (but see

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section 270 which makes provision for a corresponding exemption for them).

Overseas medical treatment

 325   Overseas medical treatment

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

benefits: residual liability to charge) in respect of—

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           (a)           providing an employee with medical treatment outside the United

Kingdom where the need for it arises while the employee is outside the

United Kingdom for the purpose of performing the duties of the

employment, or

           (b)           providing an employee with insurance against the cost of providing

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such treatment.

     (2)    For the purposes of this section—

           (a)           “medical treatment” includes all procedures for diagnosing or treating

any physical or mental illness, infirmity or defect, and

           (b)           providing a person with medical treatment includes providing for the

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person to be an in-patient so that such treatment can be given.

 

 

 
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