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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

    63

 

            which specifies separate CO2 emissions figures in terms of grams per kilometre

driven for different fuels.

     (2)    The car’s CO2 emissions figure is—

           (a)           the lowest figure specified, or

           (b)           if there is more than one figure specified in relation to each fuel, the

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lowest CO2 emissions (combined) figure specified.

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

 138   Car with a CO2 emissions figure: automatic car for a disabled employee

     (1)    This section applies where—

           (a)           a car with a CO2 emissions figure has automatic transmission (“the

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automatic car”),

           (b)           at any time in the year when the automatic car is available to the

employee (“E”), E holds a disabled person’s badge, and

           (c)           by reason of E’s disability, E must, in the event of wanting to drive a car,

drive a car which has automatic transmission.

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     (2)    If, under sections 135 to 137, the automatic car’s CO2 emissions figure is more

than it would have been if the automatic car had been an equivalent manual

car, the CO2 emissions figure for the automatic car is to be the CO2 emissions

figure for an equivalent manual car.

     (3)    In subsection (2) “an equivalent manual car” means a car which—

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           (a)           is first registered at or about the same time as the automatic car, and

           (b)           does not have automatic transmission, but otherwise is the closest

variant available of the make and model of the automatic car.

     (4)    For the purposes of this section a car has automatic transmission if—

           (a)           the driver of the car is not provided with any means by which the driver

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may vary the gear ratio between the engine and the road wheels

independently of the accelerator and the brakes, or

           (b)           the driver is provided with such means, but they do not include—

                  (i)                 a clutch pedal, or

                  (ii)                a lever which the driver may operate manually.

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     (5)    For the purposes of this section a car is available to an employee at a particular

time if it is then made available, by reason of the employment and without any

transfer of the property in it, to the employee.

 139   Car with a CO2 emissions figure: the appropriate percentage

     (1)    The appropriate percentage for a year for a car with a CO2 emissions figure

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depends upon whether the car’s CO2 emissions figure exceeds the lower

threshold for that year.

     (2)    If the car’s CO2 emissions figure does not exceed the lower threshold for the

year, the appropriate percentage for the year is 15% (“the basic percentage”).

     (3)    If the car’s CO2 emissions figure does exceed the lower threshold for the year,

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the appropriate percentage for the year is whichever is the lesser of—

 

 

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

    64

 

           (a)           the basic percentage increased by one percentage point for each 5

grams per kilometre by which the CO2 emissions figure exceeds the

lower threshold for the year, and

           (b)           35%.

     (4)    The lower threshold is—

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Tax year

Lower threshold (in g/km)

 
 

2003-04

155

 
 

2004-05 and subsequent tax years

145

 

     (5)    If the car’s CO2 emissions figure is not a multiple of 5, it is to be rounded down

to the nearest multiple of 5 for the purposes of this section.

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     (6)    This section is subject to—

           (a)           section 141 (diesel cars), and

           (b)           any regulations made by the Treasury under section 170(4) (power to

reduce the appropriate percentage).

 140   Car without a CO2 emissions figure: the appropriate percentage

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     (1)    The appropriate percentage for a year for a car without a CO2 emissions figure

is determined under this section.

     (2)    If the car has an internal combustion engine with one or more reciprocating

pistons, the appropriate percentage for the year is—

 

Cylinder capacity of car in cubic centimetres

Appropriate percentage

 

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1,400 or less

15%

 
 

More than 1,400 but not more than 2,000

25%

 
 

More than 2,000

35%

 

            For this purpose a car’s cylinder capacity is the capacity of its engine as

calculated for the purposes of VERA 1994.

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     (3)    If subsection (2) does not apply, the appropriate percentage for the year is—

           (a)           15%, if the car is an electrically propelled vehicle, and

           (b)           35%, in any other case.

     (4)    For the purposes of this section a vehicle is not an electrically propelled vehicle

unless—

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           (a)           it is propelled solely by electrical power, and

           (b)           that power is derived from—

                  (i)                 a source external to the vehicle, 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

    65

 

                  (ii)                an electrical storage battery which is not connected to any

source of power when the vehicle is in motion.

     (5)    This section is subject to—

           (a)           section 141 (diesel cars), and

           (b)           any regulations made by the Treasury under section 170(4) (power to

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reduce the appropriate percentage).

 141   Diesel cars: the appropriate percentage

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

     (2)    To determine the appropriate percentage for such a car for a year—

Step 1

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            Determine whether the car is a car with a CO2 emissions figure or a car without

a CO2 emissions figure (see section 134).

Step 2

            Take what would be the appropriate percentage for the car for the year under

section 139 or 140 as appropriate.

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Step 3

            The appropriate percentage for the car for the year is whichever is the smaller

of—

           (a)           the figure resulting from the addition of 3 percentage points to the

figure found under step 2, and

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           (b)           35%.

     (3)    In this section “diesel car” means a car which is propelled solely by diesel.

     (4)    This section is subject to any regulations made by the Treasury under section

170(4) (power to reduce the appropriate percentage).

Cars: appropriate percentage: first registered before 1st January 1998

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 142   Car first registered before 1st January 1998: the appropriate percentage

     (1)    The appropriate percentage for a car first registered before 1st January 1998 is

determined under this section.

     (2)    If the car has an internal combustion engine with one or more reciprocating

pistons, the appropriate percentage for the year is—

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Cylinder capacity of car in cubic centimetres

Appropriate percentage

 
 

1,400 or less

15%

 
 

More than 1,400 but not more than 2,000

22%

 
 

More than 2,000

32%

 
 

 

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

    66

 

            For this purpose a car’s cylinder capacity is the capacity of its engine as

calculated for the purposes of VERA 1994.

     (3)    If subsection (2) does not apply, the appropriate percentage for the year is—

           (a)           15%, if the car is an electrically propelled vehicle, and

           (b)           32%, in any other case.

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     (4)    For the purposes of this section a vehicle is not an electrically propelled vehicle

unless—

           (a)           it is propelled solely by electrical power, and

           (b)           that power is derived from—

                  (i)                 a source external to the vehicle, or

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                  (ii)                an electrical storage battery which is not connected to any

source of power when the vehicle is in motion.

Cars: unavailability or payments for private use

 143   Deduction for periods when car unavailable

     (1)    A deduction is to be made from the amount carried forward from step 6 of

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section 121(1) if the car has been unavailable on any day during the tax year in

question.

     (2)    For the purposes of this section a car is unavailable on any day if the day—

           (a)           falls before the first day on which the car is available to the employee,

           (b)           falls after the last day on which the car is available to the employee, or

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           (c)           falls within a period of 30 days or more throughout which the car is not

available to the employee.

     (3)    The amount of the deduction is given by the formula—

            equation: cross[over[char[U],char[Y]],char[A]]

            where—

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                    U is the number of days in the year on which the car is unavailable,

                    Y is the number of days in that year, and

                    A is the amount carried forward from step 6.

     (4)    This section is subject to section 145 (modification where car temporarily

replaced).

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 144   Deduction for payments for private use

     (1)    A deduction is to be made from the provisional sum calculated under step 7 of

section 121(1) if, as a condition of the car being available for the employee’s

private use, the employee—

           (a)           is required in the tax year in question to pay (whether by way of

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deduction from earnings or otherwise) an amount of money for that

use, and

           (b)           makes such payment.

 

 

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

    67

 

     (2)    If the amount paid by the employee in respect of that year is equal to or exceeds

the provisional sum, the provisional sum is reduced so that the cash equivalent

of the benefit of the car for that year is nil.

     (3)    In any other case the amount paid by the employee in respect of the year is

deducted from the provisional sum in order to give the cash equivalent of the

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benefit of the car for that year.

     (4)    In this section the reference to the car being available for the employee’s

private use includes a reference to the car being available for the private use of

a member of the employee’s family or household.

     (5)    This section is subject to section 145 (modification where car temporarily

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replaced).

 145   Modification of provisions where car temporarily replaced

     (1)    This section applies if —

           (a)           the car normally available to an employee (“the normal car”) is not

available to the employee for a period of less than 30 days,

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           (b)           another car (“the replacement car”) is made available to the employee

in order to replace the normal car for the whole or part of that period,

           (c)           the employee is chargeable to tax in respect of both the normal car and

the replacement car by virtue of section 120, and

           (d)           the replacement car meets condition A or B.

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     (2)    Condition A is met if the replacement car is not materially better than the

normal car.

     (3)    Condition B is met if the replacement car is not made available to the employee

under an arrangement of which the main purpose, or one of the main

purposes, is to provide the employee with the benefit of a car which is

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materially better than the normal car.

     (4)    If this section applies—

           (a)           section 143 (deduction for periods when car unavailable) applies so that

the replacement car is to be treated as unavailable on the days of the

period during which it replaces the normal car, and

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           (b)           section 144 (deduction for payments for private use) applies as if the

replacement had not been made and the replacement car were a

continuation of the normal car.

     (5)    A replacement car is regarded as materially better than the normal car if—

           (a)           it is materially better in quality, or

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           (b)           when calculating the cash equivalent of the benefit of the replacement

car, the interim sum calculated under step 4 of section 121(1) is

materially higher than the interim sum calculated in relation to the

normal car.

Cars: special cases

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 146   Cars that run on road fuel gas

     (1)    This section applies if the car—

 

 

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

    68

 

           (a)           has been manufactured so as to be capable of running on road fuel gas,

and

           (b)           is not a car to which section 137 (different CO2 emissions figure for bi-

fuel cars) applies.

     (2)    The price of the car found under step 1 of section 121(1) is to be reduced by so

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much of that price as it is reasonable to attribute to the car being manufactured

in such a way as to be capable of running on road fuel gas rather than in such

a way as to be capable of running only on petrol.

 147   Classic cars: 15 years of age or more

     (1)    This section applies in calculating the cash equivalent of the benefit of a car for

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a tax year if—

           (a)           the age of the car at the end of the year is 15 years or more,

           (b)           the market value of the car for the year is £15,000 or more, and

           (c)           that market value exceeds the amount carried forward from step 3 of

section 121(1).

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     (2)    For the amount carried forward from step 3 substitute the market value of the

car for the tax year in question less any deductions under subsection (6).

     (3)    The market value of a car for a tax year is the price which the car might

reasonably have been expected to fetch on a sale in the open market on—

           (a)           the last day of that year, or

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           (b)           the last day in that year on which the car is available to the employee if

that is earlier.

     (4)    It is assumed that any qualifying accessories available with the car on that day

are included in the sale.

     (5)    Subsection (6) 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 determining the

market value of the car.

     (6)    A deduction is to be made from the market value of the car—

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           (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.

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

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

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and any earlier years to expenditure on the provision of—

                  (i)                 the car, or

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

determining the market value of the car for the tax year in

question, and

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           (b)           £5,000.

 

 

 
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