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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 3 — Employment income: earnings and benefits etc. treated as earnings

    535

 

Taxable benefits: the benefits code

  17      (1)      In relation to times before 6th April 2003, references in the benefits code to

“employment”, “employed”, “employee” and “employer” are to be read in

accordance with this paragraph.

          (2)      In relation to the Chapters of the benefits code listed in section 216(4)

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(provisions not applicable to lower-paid employments), the references

mentioned in sub-paragraph (1) are to be read in accordance with section 66

(meaning of employment and related expressions) but as if in subsection

(1)(a) there were substituted “an employment to which Chapter 2 of Part 5

of ICTA applies” for “a taxable employment under Part 2”.

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          (3)      In relation to any other Chapters of the benefits code, the references

mentioned in sub-paragraph (1) are to be read in accordance with section 66

but as if in subsection (1)(a) there were substituted “an employment the

emoluments of which fall to be assessed under Schedule E” for “a taxable

employment under Part 2”.

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          (4)      Where this paragraph applies, Chapter 11 of Part 3 (exclusion of lower-paid

employments from parts of benefits code) does not apply.

          (5)      This paragraph is subject to paragraphs 18(2), 24, 27(3), 29(4) and 31(2) of this

Schedule.

Taxable benefits: vouchers and credit-tokens

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  18      (1)      For the purpose of applying sections 82 to 89 (non-cash vouchers) in relation

to times before 6th April 2003, Chapter 4 of Part 3 applies with the following

modification.

          (2)      In section 89(1)(c) (reduction for meal vouchers) substitute “an employment

which is not an employment within the meaning of section 167(1)(b) of

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ICTA” for “lower-paid employment within the meaning of Chapter 11 of this

Part (see section 217)”.

  19      (1)      This paragraph applies to a notification which, immediately before 6th April

2003, was in force under section 144(1) of ICTA (notice of nil liabilities in

respect of vouchers or credit-tokens).

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          (2)      The notification—

              (a)             is not affected by any repeals made by this Act, but

              (b)             continues in force as if it were a dispensation given under section 96

(dispensations relating to vouchers or credit-tokens),

                   and accordingly, where the notification is revoked under that section for any

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period before 6th April 2003, subsection (7) or (8) of that section extends to

tax years before the tax year 2003-04.

  20      (1)      This paragraph applies if—

              (a)             mileage allowance payments are made to an employee in respect of

the use of a vehicle that is not a company vehicle, or

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              (b)             mileage allowance relief is available in respect of the use by an

employee of a vehicle.

          (2)      Any notification under section 144(1) of ICTA (notice of nil liability in

respect of vouchers or credit-tokens) which—

              (a)             was in force immediately before 6th April 2002, and

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Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 3 — Employment income: earnings and benefits etc. treated as earnings

    536

 

              (b)             has effect as a dispensation under section 96 (dispensations relating

to vouchers or credit-tokens),

                   does not apply in relation to cash vouchers, non-cash vouchers or credit-

tokens provided in respect of expenses incurred in connection with the use

of the vehicle by the employee for business travel.

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          (3)      In this paragraph “business travel”, “company vehicle” and “mileage

allowance payment” have the same meanings as in Chapter 2 of Part 4.

Taxable benefits: living accommodation

  21      (1)      Section 107 (special rule for calculating cost of providing accommodation)

does not apply if the employee first occupied the living accommodation

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before 31st March 1983.

          (2)      Nothing in this paragraph affects the operation of section 107 as applied by

section 398(2)(b) or 415(2)(b).

Taxable benefits: cars, vans and related benefits

  22      (1)      In relation to a capital sum contributed by the employee before 6th April

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2003, section 132 (cars: capital contributions by employee) applies with the

following modifications.

          (2)      In subsection (1)(b) substitute “under sections 168A to 168C of ICTA in

determining the price of the car as regards a year” for “in calculating the cash

equivalent of the benefit of the car”.

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          (3)      In subsection (2)—

              (a)             omit paragraph (a), and

              (b)             in paragraph (b) substitute “the tax years after the tax year in which

the contribution was made which are” for “subsequent”.

  23      (1)      In relation to a capital sum contributed by the employee before 6th April

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2003, section 147 (classic cars: 15 years of age or more) applies with the

following modifications.

          (2)      In subsection (5)(b) substitute “under section 168F(3) of ICTA in determining

the price of the car as regards a year” for “in determining the market value

of the car”.

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          (3)      In subsection (6)—

              (a)             omit paragraph (a), and

              (b)             in paragraph (b) substitute “the tax years after the tax year in which

the contribution was made which are” for “subsequent”.

  24      (1)      This paragraph applies to the operation of section 156(4) (meaning of

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“shared van”: where van available to only one employee) in relation to times

before 6th April 2003.

          (2)      The following references are to be read in accordance with section 66

(meaning of “employment” and related expressions) as modified by sub-

paragraph (3)—

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              (a)             the reference to an “employee” in section 156(4), and

              (b)             the references to “employee”, “employment” and “employer” in

sections 116 and 117 (meaning of van is available to employee) as

applied for the purposes of section 156(4).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 3 — Employment income: earnings and benefits etc. treated as earnings

    537

 

          (3)      In section 66(1)(a) substitute “an employment the emoluments of which fall

to be assessed under Schedule E” for “a taxable employment under Part 2”.

Taxable benefits: loans

  25      (1)      Chapter 7 of Part 3 applies to a loan made at any time, including one made

before 29th July 1976 (the date on which FA 1976 was passed).

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          (2)      But section 188 (loan released or written off: amount treated as earnings)

does not apply to benefits received in pursuance of arrangements made at

any time with a view to protecting the holder of shares acquired before 6th

April 1976 from a fall in their market value.

  26      (1)      This paragraph relates to the operation of section 183 (alternative method of

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calculation) in relation to section 177(2) (exceptions for loans at fixed rate of

interest) in the case of a loan made before 6th April 2003.

          (2)      Where section 183 applies, then for the purpose of calculating under section

177(2) the amount of interest that would have been payable on the loan at

the official rate of interest for the year in which the loan was made, in step 3

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in section 183(3) for “the number of days in the tax year” substitute “365”.

  27      (1)      Subject to paragraph 25(2), where a loan is made before 6th April 2003,

section 188 (loan released or written off: amount treated as earnings) applies

with the following modifications.

          (2)      References to the employment in relation to which a loan is an employment-

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related loan are to be read, in relation to times before 6th April 2003, as

references to the employment referred to in section 174 (employment-

related loans) as modified by paragraph 17.

          (3)      In relation to times before 6th April 2003—

              (a)             in subsection (2)(c), substitute “an employment to which Chapter 2

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of Part 5 of ICTA applies” for “not an excluded employment”, and

              (b)             in subsection (3)(a), substitute “an employment to which Chapter 2

of Part 5 of ICTA does not apply” for “excluded employment”.

Taxable benefits: notional loans in respect of acquisitions of shares

  28       Chapter 8 of Part 3 does not apply in relation to acquisitions on or before 6th

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April 1976.

  29      (1)      This paragraph relates to the operation of Chapter 8 of Part 3 in relation to

an acquisition made before 6th April 2003.

          (2)      If—

              (a)             the acquisition gave rise to a notional loan under section 162(1) of

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ICTA, and

              (b)             the notional loan has not terminated under section 162(4) of ICTA

before 6th April 2003,

                   the condition in section 193(1) (notional loan where acquisition for less than

market value) is taken to be met and section 193(3) and (4) apply

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accordingly.

          (3)      In such a case, the amount initially outstanding of the notional loan for the

purposes of Chapter 8 of Part 3 is taken to be the amount initially

outstanding calculated under section 162 of ICTA in relation to the tax year

2002-03.

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Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 4 — Employment income: exemptions

    538

 

          (4)      In such a case, section 195(3)(c) (discharge of notional loan: amount treated

as earnings) applies, in relation to times before 6th April 2003, with the

substitution of “an employment to which Chapter 2 of Part 5 of ICTA

applies” for “not an excluded employment”.

Taxable benefits: disposals of shares for more than market value

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  30       Chapter 9 of Part 3 does not apply in relation to shares or an interest in

shares acquired on or before 6th April 1976.

  31      (1)      This paragraph relates to the operation of section 199 (disposal for more than

market value: amount treated as earnings) in relation to an acquisition made

before 6th April 2003.

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          (2)      Subsection (4)(b) applies, in relation to times before 6th April 2003, with the

substitution of “an employment to which Chapter 2 of Part 5 of ICTA

applies” for “not an excluded employment”.

Taxable benefits: residual liability to charge

  32      (1)      This paragraph applies in relation to Chapter 10 of Part 3.

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          (2)      In section 206, the references in subsection (4) and step 2 in subsection (5) to

the cost of a benefit determined under section 205 are to be read as including

a reference to the cost of a benefit determined under section 156(5) of ICTA.

          (3)      Sections 212, 213 and 215 do not have effect in relation to any payment if—

              (a)             it is made in respect of a scholarship awarded before 15th March

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1983,

              (b)             the first payment in respect of the scholarship was made before 6th

April 1984, and

              (c)             in relation to payments made after 5th April 1989, the person holding

the scholarship (“the scholar”) is receiving full-time instruction at the

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university, college, school or other educational establishment at

which the scholar was receiving such instruction on—

                    (i)                   15th March 1983, in a case where the first payment in respect

of the scholarship was made before that date, or

                    (ii)                  the date on which the first such payment was made, in any

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other case.

          (4)      For the purposes of sub-paragraph (3)(c), a payment made before 6th April

1989 in respect of any period beginning on or after that date is treated as

made at the beginning of that period.

Part 4

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Employment income: exemptions

Incidental overnight expenses and benefits

  33       In determining whether section 240(1) or (2) or 268 applies—

              (a)             in the case of a period of absence which began before 6th April 2003

and ends on or after that date, or

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              (b)             in the case of a period of absence which begins on or after that date

and incidentally to which goods, services or money are obtained

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 4 — Employment income: exemptions

    539

 

              (b)             using a non-cash voucher in relation to which section 141(6C) of

ICTA applies,

                   the question whether for the purposes of section 241 the exemption

provisions total exceeds the permitted amount is to be determined as if this

Act had applied at any relevant time before that date.

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  34       In determining—

              (a)             whether section 141(6C) and (6D), 142(3C) and (3D), 155(1B) and (1C)

or section 200A of ICTA applies in the case of a period of absence

which began before 6th April 2003 and ends on or after that date, or

              (b)             whether section 141(6C) and (6D) applies in the case of a period of

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absence which begins on or after that date,

           the question whether the authorised maximum (as defined in section

200A(4) of ICTA) is exceeded in relation to the absence is to be determined

as if in section 200A(5) after the words “exceeded by” there were inserted the

words “the aggregate of the exemption provisions total in respect of the

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period (as defined in section 241 of ITEPA 2003) and”.

Removal benefits and expenses

  35      (1)      Section 287 (limit on exemption for removal benefits and expenses) applies

with the modification in sub-paragraph (2) where—

              (a)             a benefit is provided on or after 6th April 2003 in connection with a

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change of an employee’s residence, or

              (b)             expenses are incurred on or after that day in connection with such a

change,

                   and any such benefits have been provided or expenses incurred before that

date in connection with that change.

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          (2)      In subsection (2) before paragraph (a) insert—

                                          “(aa) the total value to the employee immediately before 6th

April 2003, as defined in paragraph 24(2) of Schedule 11A to

ICTA,”.

  36       A direction under paragraph 6(2) of Schedule 11A to ICTA (directions as to

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meaning of “the relevant day”) by virtue of which a day on or after 6th April

2003 was directed to be the relevant day in relation to a change of

residence—

              (a)             is not affected by any repeals made by this Act, but

              (b)             continues in force as respects any benefit provided or expenses

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incurred on or after that date as if it were a direction given under

section 274(2) (directions as to the limitation day), directing that day

to be the limitation day.

Retraining courses

  37      (1)      The repeal of sections 588(5)(a) and 589(3) and (4) of ICTA does not affect—

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              (a)             the operation of section 588(5) of ICTA by virtue of paragraph (a) of

that provision where liability for a tax year before 2003-04 is

determined,

              (b)             the operation of section 588(5) of ICTA by virtue of paragraph (b) of

that provision where liability is determined on the assumption that

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Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 5 — Employment income: deductions

    540

 

              (b)             the person undertaking the course fell within section 588(1) of ICTA

in such a tax year, or

              (c)             the operation of section 588(6) and (7) of ICTA as they apply by

virtue of sub-paragraph (2).

          (2)      In any case where there has been such a determination as is mentioned in

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sub-paragraph (1)(a) or (b), section 588(6) and (7) apply as if section 588(6)

referred to a failure to comply with any provision of section 589(3) or (4) of

ICTA instead of a failure to meet such a condition as is mentioned in section

312(1)(b)(i) or (ii) of this Act.

Suggestion awards

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  38      (1)      This paragraph applies for the purpose of determining the extent, if any, to

which section 321(2) (exemption of suggestion awards) applies in respect of

a financial benefit award for a suggestion (“the later award”) in a case where

such an award (“the earlier award”) has been made for the same suggestion

on a previous occasion or occasions before the tax year 2003-04.

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          (2)      For the purposes of the application of section 322(3) in relation to the later

award, “the residue of the suggestion maximum” means the suggestion

maximum, as defined in section 322(4), less the aggregate of—

              (a)             the total of the amounts exempted from income tax under section 321

in respect of financial benefit awards for the same suggestion made

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on previous occasions, and

              (b)             the total of the earlier awards.

Part 5

Employment income: deductions

Earnings charged on remittance

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  39       In relation to expenses incurred before the tax year 2003-04, section 353

(deductions from earnings charged on remittance) applies as if the condition

in subsection (3) of that section were that the expenses would have been

deductible under section 193, 194, 195 or 198(1) of ICTA from emoluments

of the office or employment if those emoluments had been chargeable under

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Case I of Schedule E for the tax year in which the expenses were incurred.

Non-domiciled employee’s travel costs and expenses: “qualifying arrival date”

  40       In relation to any time before 6th April 2003, section 375 (meaning of

“qualifying arrival date”) has effect as if the references in subsections (1)(a)

and (4) to the person receiving earnings for duties performed in the United

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Kingdom included a reference to the person receiving emoluments for such

duties.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 7 — Transitionals and savings
Part 6 — Employment income: income which is not earnings or share-related

    541

 

Part 6

Employment income: income which is not earnings or share-related

Benefits from non-approved pension schemes

  41      (1)      Chapter 2 of Part 6 (benefits from non-approved pension schemes) applies

with the following modifications in relation to a benefit provided under a

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non-approved retirement benefits scheme which—

              (a)             was entered into before 1 December 1993, and

              (b)             has not been varied on or after that day with a view to the provision

of the benefit.

          (2)      Section 393(2) does not apply.

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          (3)      Section 394(5) does not apply.

          (4)      For sections 395, 396 and 397 substitute—

       “394A  Pre-December 1993 schemes: chargeability of certain lump sums

              (1)                             Section 394 does not apply to a lump sum to the extent that the lump

sum is attributable to the payment of a sum—

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                    (a)                   which is deemed to be the income of a person by virtue of

section 595(1) of ICTA and in respect of which that person has

been assessed to tax, or

                    (b)                   which counted as the employment income of an employee by

virtue of section 386(1) of this Act.

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              (2)                             For the purposes of subsection (1) it must be assumed that, unless the

contrary is shown, the provision of a lump sum is not attributable to

the payment of such a sum as is mentioned in that subsection.

       394B  Pre-December 1993 schemes: relationship between this Chapter and

Part 2

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              (1)             This section applies if, apart from this section, the provision of a

benefit to which this Chapter applies would give rise to two amounts

(“A” and “B”)—

                    (a)                   A being an amount of general earnings from an employment

(see section 7), and

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                    (b)                   B being an amount which is to count as employment income

of an individual by virtue of section 394(1).

              (2)             In such a case—

                    (a)                   A constitutes general earnings from the employment, and

                    (b)                   the amount, if any, by which B exceeds A is to count as

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employment income of the individual by virtue of section

394(1).”

Payments and benefits on termination of employment etc.

  42       Section 403 (charge on payment or other benefit) does not apply in relation

to payments or other benefits received on or after 6th April 2003 that were

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brought into charge to tax before 6th April 1998.

 

 

 
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