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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    56

 

     (2)    The mere fact that the alternative is offered does not result in an amount in

respect of the benefit constituting earnings by virtue of Chapter 1 of this Part

(earnings).

Cars: benefit treated as earnings

 120   Benefit of car treated as earnings

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     (1)    If this Chapter applies to a car in relation to a particular tax year, the cash

equivalent of the benefit of the car is to be treated as earnings from the

employment for that year.

     (2)    In such a case the employee is referred to in this Chapter as being chargeable

to tax in respect of the car in that year.

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 121   Method of calculating the cash equivalent of the benefit of a car

     (1)    The cash equivalent of the benefit of a car for a tax year is calculated as

follows—

Step 1

            Find the price of the car in accordance with sections 122 to 124.

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Step 2

            Add the price of any accessories which fall to be taken into account in

accordance with sections 125 to 131.

Step 3

            Make any deduction under section 132 for capital contributions made by the

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employee to the cost of the car or accessories.

Step 4

            If the amount carried forward from step 3 exceeds £80,000, the interim sum is

£80,000.

            In any other case, the interim sum is the amount carried forward from step 3.

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Step 5

            Find the appropriate percentage for the car for the year in accordance with

sections 133 to 142.

Step 6

            Multiply the interim sum by the appropriate percentage for the car for the year.

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Step 7

            Make any deduction under section 143 for any periods when the car was

unavailable.

            The resulting amount is the provisional sum.

Step 8

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            Make any deduction from the provisional sum under section 144 in respect of

payments by the employee for the private use of the car.

            

            The result is the cash equivalent of the benefit of the car for the year.

 

 

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    57

 

     (2)    The method of calculation set out in subsection (1) is modified in the special

cases dealt with in—

                    section 146 (cars that run on road fuel gas), and

                    section 147 (classic cars: 15 years of age or more).

     (3)    The cash equivalent may be reduced under section 148 where the car is shared.

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Cars: the price of a car

 122   The price of the car

For the purposes of this Chapter the price of a car means—

           (a)           its list price, if it has one, or

           (b)           its notional price, if it has no list price.

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 123   The list price of a car

     (1)    In this Chapter a car’s “list price” means the price published by the car’s

manufacturer, importer or distributor (as the case may be) as the inclusive

price appropriate for a car of that kind if sold—

           (a)           in the United Kingdom,

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           (b)           singly,

           (c)           in a retail sale,

           (d)           in the open market, and

           (e)           on the day immediately before the date of the car’s first registration.

     (2)    The “inclusive price” means the price inclusive of—

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           (a)           any charge for delivery by the manufacturer, importer or distributor to

the seller’s place of business, and

           (b)           any relevant taxes (see section 171(1)).

 124   The notional price of a car with no list price

     (1)    In this Chapter a car’s “notional price” means the price which might reasonably

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have been expected to be its list price if its manufacturer, importer or

distributor (as the case may be) had published a price as the inclusive price

appropriate for a sale of a car of the same kind sold—

           (a)           in the United Kingdom,

           (b)           singly,

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           (c)           in a retail sale,

           (d)           in the open market,

           (e)           on the day immediately before the date of the car’s first registration,

and

           (f)           with accessories equivalent to the qualifying accessories (see section

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125) available with the car at the time when it was first made available

to the employee.

     (2)    In this section “inclusive price” has the same meaning as in section 123.

 

 

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    58

 

Cars: treatment of accessories

 125   Meaning of “accessory” and related terms

     (1)    In this Chapter “qualifying accessory” means an accessory which—

           (a)           is made available for use with the car without any transfer of the

property in the accessory,

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           (b)           is made available by reason of the employment, and

           (c)           is attached to the car (whether permanently or not).

     (2)    For the purposes of this Chapter “accessory” includes any kind of equipment

but does not include—

           (a)           equipment necessarily provided for use in the performance of the

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duties of the employment;

           (b)           equipment by means of which a car is capable of running on road fuel

gas;

           (c)           equipment to enable a disabled person to use a car (see section 172);

           (d)           a mobile telephone (within the meaning given in section 319(2)).

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     (3)    But subsection (2)(b) does not apply in relation to a car to which section 137

(different CO2 emissions figure for bi-fuel cars) applies.

     (4)    In this Chapter—

                    “standard accessory” means an accessory equivalent to an accessory

assumed to be available with cars of the same kind as the car in

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question in arriving at the list price, and

                    “non-standard accessory” means any other accessory.

 126   Amounts taken into account in respect of accessories

     (1)    The price of the following accessories is to be taken into account under step 2

of section 121(1)—

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           (a)           in the case of a car with a list price, the price of any initial extra

accessory, and

           (b)           in the case of any car, the price of any later accessory.

     (2)    In this Chapter an “initial extra accessory” means a qualifying accessory

which—

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           (a)           is a non-standard accessory,

           (b)           is available with the car at the time when it is first made available to the

employee, and

           (c)           if it is an accessory in relation to which there is no published price of the

manufacturer, importer or distributor of the car (see section 128), is

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available with the car in the tax year in question.

     (3)    In this Chapter a “later accessory” means a qualifying accessory which—

           (a)           is available with the car in the tax year in question,

           (b)           was not available with the car at the time when it was first made

available to the employee,

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           (c)           was not made available with the car before 1st August 1993, and

           (d)           has a price of at least £100.

     (4)    In this section references to the price of an accessory are to—

           (a)           its list price, if it has one, or

 

 

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    59

 

           (b)           its notional price, if it has no list price.

     (5)    This section is subject to section 131 (replacement accessories).

 127   The list price of an accessory

     (1)    For the purposes of this Chapter the list price of an initial extra accessory is—

           (a)           the published price of the manufacturer, importer or distributor of the

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car (see section 128), or

           (b)           if there is no such price, the published price of the manufacturer,

importer or distributor of the accessory (see section 129).

     (2)    For the purposes of this Chapter the list price of a later accessory is the

published price of the manufacturer, importer or distributor of the accessory

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(see section 129).

 128   Accessory: published price of the car manufacturer etc.

     (1)    In this Chapter the “published price of the manufacturer, importer or

distributor of the car” in relation to an accessory means the price published by

the car’s manufacturer, importer or distributor (as the case may be) as the

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inclusive price appropriate for an equivalent accessory if sold with a car of the

same kind—

           (a)           in the United Kingdom,

           (b)           singly,

           (c)           in a retail sale,

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           (d)           in the open market, and

           (e)           on the day immediately before the date of the car’s first registration.

     (2)    The “inclusive price” means the price inclusive of—

           (a)           any charge for delivery by the manufacturer, importer or distributor to

the seller’s place of business,

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           (b)           any relevant taxes other than car tax (see section 171(1)), and

           (c)           any charge for fitting the accessory.

 129   Accessory: published price of the accessory manufacturer etc.

     (1)    In this Chapter the “published price of the manufacturer, importer or

distributor of the accessory” in relation to an accessory means the price

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published by or on behalf of the manufacturer, importer or distributor of the

accessory (as the case may be) as the inclusive price appropriate for such an

accessory if sold—

           (a)           in the United Kingdom,

           (b)           singly,

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           (c)           in a retail sale,

           (d)           in the open market, and

           (e)           at the time immediately before the accessory concerned is first made

available for use with the car.

     (2)    The “inclusive price” means the price inclusive of—

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           (a)           any charge for delivery by the manufacturer, importer or distributor to

the seller’s place of business,

           (b)           any relevant taxes other than car tax (see section 171(1)), and

 

 

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    60

 

           (c)           in the case of an accessory permanently attached to the car, the price

which the seller would charge for attaching it.

     (3)    In the case of an initial extra accessory, the time referred to in subsection (1)(e)

may be a time before the car is first made available to the employee.

 130   The notional price of an accessory

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     (1)    In this Chapter the “notional price” of an accessory means the inclusive price

which it might reasonably have been expected to fetch if sold—

           (a)           in the United Kingdom,

           (b)           singly,

           (c)           in a retail sale,

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           (d)           in the open market, and

           (e)           at the time immediately before the accessory concerned is first made

available for use with the car.

     (2)    The “inclusive price” means the price inclusive of—

           (a)           any charge for delivery by the manufacturer, importer or distributor to

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the seller’s place of business,

           (b)           any relevant taxes other than car tax (see section 171(1)), and

           (c)           in the case of an accessory permanently attached to the car, the price

which the seller would charge for attaching it.

     (3)    In the case of an initial extra accessory, the time referred to in subsection (1)(e)

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may be a time before the car is first made available to the employee.

 131   Replacement accessories

     (1)    This section applies where—

           (a)           a later accessory is available with the car in the tax year in question,

           (b)           that accessory (“the new accessory”) replaced another qualifying

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accessory (“the old accessory”) in that year or an earlier tax year, and

           (c)           the new accessory is of the same kind as the old accessory.

     (2)    If the new accessory is not superior to the old accessory, the cash equivalent of

the benefit of the car for the tax year is to be calculated under step 2 of section

121(1) as if—

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           (a)           the replacement has not been made, and

           (b)           the new accessory is a continuation of the old accessory.

     (3)    If the new accessory is superior to the old accessory and the conditions in

subsection (4) are met, the cash equivalent of the benefit of the car for the tax

year is to be calculated under step 2 of section 121(1)—

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           (a)           as if the old accessory was not available with the car in that tax year, or

           (b)           where the price of the old accessory would (apart from this section) be

added to the price of the car under step 2 of section 121(1) as an initial

extra accessory, as if it was not available with the car at the time when

the car was first made available to the employee.

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     (4)    The conditions mentioned in subsection (3) are that—

           (a)           the old accessory was a non-standard accessory, and

 

 

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    61

 

           (b)           both the old and the new accessory would (apart from this section) be

taken into account under step 2 of section 121(1) in calculating the cash

equivalent of the benefit of the car for the year.

     (5)    For the purposes of this section a new accessory is superior to an old accessory

if the price of the new accessory exceeds whichever is the greater of—

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           (a)           the price of the old accessory, and

           (b)           the price of an accessory equivalent to the old accessory at the time

immediately before the new accessory is first made available for use

with the car.

     (6)    In this section references to the price of an accessory are to—

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           (a)           its list price, if it has one, or

           (b)           its notional price, if it has no list price.

Cars: capital contributions by employee

 132   Capital contributions by employee

     (1)    This section applies if the employee contributes a capital sum to expenditure

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on the provision of—

           (a)           the car, or

           (b)           any qualifying accessory which is taken into account in calculating the

cash equivalent of the benefit of the car.

     (2)    A deduction is to be made from the amount carried forward from step 2 of

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section 121(1)—

           (a)           for the tax year in which the contribution is made, and

           (b)           for all subsequent years in which the employee is chargeable to tax in

respect of the car by virtue of section 120.

     (3)    The amount of the deduction allowed in any tax year is the lesser of—

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           (a)           the total of the capital sums contributed by the employee in that year

and any earlier years to expenditure on the provision of—

                  (i)                 the car, or

                  (ii)                any qualifying accessory which is taken into account in

calculating the cash equivalent of the benefit of the car for the

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tax year in question, and

           (b)           £5,000.

Cars: the appropriate percentage

 133   How to determine the “appropriate percentage”

     (1)    The “appropriate percentage” for a car for a year depends upon when the car

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was first registered.

     (2)    If the car was first registered on or after 1st January 1998, the “appropriate

percentage” depends upon whether the car—

           (a)           is a car with a CO2 emissions figure (see section 134(1)),

           (b)           is a car without a CO2 emissions figure (see section 134(2)), or

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           (c)           is a diesel car to which section 141 applies,

            and is determined under sections 139 to 141.

 

 

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits

    62

 

     (3)    If the car was first registered before 1st January 1998, the “appropriate

percentage” is determined under section 142.

 134   Meaning of car with or without a CO2 emissions figure

     (1)    In this Chapter a “car with a CO2 emissions figure” means—

           (a)           a car first registered on or after 1st January 1998 but before 1st October

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1999 to which section 135 applies,

           (b)           a car first registered on or after 1st October 1999 to which section 136

applies, or

           (c)           a car first registered on or after 1st January 2000 which is a car to which

section 137 (bi-fuel cars) applies.

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     (2)    In this Chapter a “car without a CO2 emissions figure” means any other car first

registered on or after 1st January 1998.

Cars: appropriate percentage: first registered on or after 1st January 1998

 135   Car with a CO2 emissions figure: pre-October 1999 registration

     (1)    This section applies to a car first registered on or after 1st January 1998 but

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before 1st October 1999 if when it was so registered—

           (a)           it conformed to a vehicle type with an EC type-approval certificate (see

section 171(1)), or

           (b)           it had a UK approval certificate (see section 171(1)),

            which specifies a CO2 emissions figure in terms of grams per kilometre driven.

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     (2)    The car’s CO2 emissions figure is that specified figure.

     (3)    This is subject to section 138 (automatic car for a disabled employee).

 136   Car with a CO2 emissions figure: post-September 1999 registration

     (1)    This section applies to a car first registered on or after 1st October 1999 if it is

so registered on the basis of—

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           (a)           an EC certificate of conformity (see section 171(1)), or

           (b)           a UK approval certificate (see section 171(1)),

            which specifies a CO2 emissions figure in terms of grams per kilometre driven.

     (2)    The car’s CO2 emissions figure is that specified figure unless more than one

figure is specified, in which case the car’s CO2 emissions figure is the figure

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specified as the CO2 emissions (combined) figure.

     (3)    This is subject to—

           (a)           section 137 (bi-fuel cars), and

           (b)           section 138 (automatic car for a disabled employee).

 137   Car with a CO2 emissions figure: bi-fuel cars

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     (1)    This section applies to a car first registered on or after 1st January 2000 if it is

so registered on the basis of—

           (a)           an EC certificate of conformity (see section 171(1)), or

           (b)           a UK approval certificate (see section 171(1)),

 

 

 
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