(8) In this section “pre-commencement dispensation” means a dispensation given
(or treated as given) under section 65 or 96 of ITEPA 2003 which is in force
immediately before 6 April 2016.

13 Extension of benefits code except in relation to certain ministers of religion

(1) 5Omit Chapter 11 of Part 3 of ITEPA 2003 (taxable benefits: exclusion of lower-
paid employments from parts of benefits code).

(2) In Part 4 of that Act (employment income: exemptions), after section 290B
insert—

“290C Provisions of benefits code not applicable to lower-paid ministers of
10religion

(1) This section applies where a person is in employment which is lower-
paid employment as a minister of religion in relation to a tax year.

(2) No liability to income tax arises in respect of the person in relation to
the tax year by virtue of any of the following Chapters of the benefits
15code—

(a) Chapter 3 (taxable benefits: expenses payments);

(b) Chapter 6 (taxable benefits: cars, vans and related benefits);

(c) Chapter 7 (taxable benefits: loans);

(d) Chapter 10 (taxable benefits: residual liability to charge).

(3) 20Subsection (2)—

(a) means that in any of those Chapters a reference to an employee
does not include an employee whose employment is within the
exclusion in that subsection, if the context is such that the
reference is to an employee in relation to whom the Chapter
25applies, but

(b) does not restrict the meaning of references to employees in
other contexts.

(4) Subsection (2) has effect subject to—

(a) section 188(2) (discharge of loan: where employment becomes
30lower-paid), and

(b) section 290G (employment in two or more related
employments).

290D Meaning of “lower-paid employment as a minister of religion”

(1) For the purposes of this Part an employment is “lower-paid
35employment as a minister of religion” in relation to a tax year if—

(a) the employment is direct employment as a minister of a
religious denomination, and

(b) the earnings rate for the employment for the year (calculated
under section 290E) is less than £8,500.

(2) 40An employment is not “direct employment” for the purposes of
subsection (1)(a) if—

(a) it is an employment which is treated as existing under—

(i) section 56(2) (deemed employment of worker by
intermediary), or

(ii) section 61G(2) (deemed employment of worker by
managed service company), or

(b) an amount counts as employment income in respect of it by
virtue of section 554Z2(1) (treatment of relevant step under Part
57A (employment income provided through third parties)).

(3) Subsection (1) is subject to section 290G.

290E Calculation of earnings rate for a tax year

(1) For any tax year the earnings rate for an employment is to be calculated
as follows—

10Step 1

Find the total of the following amounts—

• the total amount of the earnings from the employment for the
  year within Chapter 1 of Part 3 (earnings),

• the total of any amounts that are treated as earnings from the
  15employment for the year under the benefits code (see
  subsections (2) and (3)), and

• the total of any amounts that are treated as earnings from the
  employment for the year under Chapter 12 of Part 3 (other
  amounts treated as earnings),

20excluding any exempt income, other than any attributable to section
290A or 290B (accommodation outgoings of ministers of religion).

Step 2

Add to that total any extra amount required to be added for the year by
section 290F (extra amounts to be added in connection with a car).

25Step 3

Subtract the total amount of any authorised deductions (see subsection
(4)) from the result of step 2.

Step 4

The earnings rate for the employment for the year is given by the
30formula—

(2) Section 290C(2) (provisions of benefits code not applicable to lower-
paid ministers of religion) is to be disregarded for the purpose of
determining any amount under step 1.

(3) If the benefit of living accommodation is to be taken into account under
40step 1, the cash equivalent is to be calculated in accordance with section
105 (even if the cost of providing the accommodation exceeds £75,000).

(4) For the purposes of step 3 “authorised deduction” means any
deduction that would (assuming it was an amount of taxable earnings)
be allowed from any amount within step 1 under—

• 45section 346 (employee liabilities),

Finance (No. 2) BillPage 12

• section 370 (travel costs and expenses where duties performed
  abroad: employee’s travel),

• section 371 (travel costs and expenses where duties performed
  abroad: visiting spouse’s, civil partner’s or child’s travel),

• 5section 373 (non-domiciled employee’s travel costs and
  expenses where duties performed in UK),

• section 374 (non-domiciled employee’s spouse’s, civil partner’s
  or child’s travel costs and expenses where duties performed in
  UK),

• 10section 376 (foreign accommodation and subsistence costs and
  expenses (overseas employments)),

• section 713 (payroll giving to charities),

• sections 188 to 194 of FA 2004 (contributions to registered
  pension schemes), or

• 15section 262 of CAA 2001 (capital allowances to be given effect
  by treating them as deductions).

290F Extra amounts to be added in connection with a car

(1) The provisions of this section apply for the purposes of section 290E in
the case of a tax year in which a car is made available as mentioned in
20section 114(1) (cars, vans and related benefits) by reason of the
employment.

(2) Subsection (3) applies if in the tax year—

(a) an alternative to the benefit of the car is offered, and

(b) the amount that would be earnings within Chapter 1 of Part 3 if
25the benefit of the car were to be determined by reference to the
alternative offered exceeds the benefit code earnings (see
subsection (4)).

(3) The amount of the excess is an extra amount to be added under step 2
in section 290E(1).

(4) 30For the purposes of subsection (2) “the benefit code earnings” is the
total for the year of—

(a) the cash equivalent of the benefit of the car (calculated in
accordance with Chapter 6 of Part 3 (taxable benefits: cars, vans
etc)), and

(b) 35the cash equivalent (calculated in accordance with that Chapter)
of the benefit of any fuel provided for the car by reason of the
employment.

(5) Section 290C(2) (provisions of benefits code not applicable to lower-
paid ministers of religion) is to be disregarded for the purpose of
40determining any amount under this section.

290G Related employments

(1) This section applies if a person is employed in two or more related
employments.

(2) None of the employments is to be regarded as lower-paid employment
45as a minister of religion in relation to a tax year if—

(a) the total of the earnings rates for the employments for the year
(calculated in each case under section 290E) is £8,500 or more, or

(b) any of them is an employment falling outside the exclusion
contained in section 290C(2) (provisions of benefits code not
applicable to lower-paid ministers of religion).

(3) For the purposes of this section two employments are “related” if—

(a) 5both are with the same employer, or

(b) one is with a body or partnership (“A”) and the other is either—

(i) with an individual, partnership or body that controls A
(“B”), or

(ii) with another partnership or body also controlled by B.

(4) 10Section 69 (extended meaning of “control”) applies for the purposes of
this section as it applies for the purposes of the benefits code.”

(3) Schedule 1 contains amendments relating to subsections (1) and (2).

(4) The amendments made by this section and Schedule 1 have effect for the tax
year 2016-17 and subsequent tax years.

14 15Exemption for board or lodging provided to carers

(1) Part 4 of ITEPA 2003 (employment income: exemptions) is amended as follows.

(2) In Chapter 8 (exemptions: special kinds of employees), after section 306
insert—

“Carers

306A 20Carers: board and lodging

(1) For the purposes of this section an individual is employed as a home
care worker if the duties of the employment consist wholly or mainly
of the provision of personal care to another individual (“the recipient”)
at the recipient’s home, in a case where the recipient is in need of
25personal care because of—

(a) old age,

(b) mental or physical disability,

(c) past or present dependence on alcohol or drugs,

(d) past or present illness, or

(e) 30past or present mental disorder.

(2) 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 board or lodging (or both) to an individual employed as a home care
worker if the provision is—

(a) 35on a reasonable scale,

(b) at the recipient’s home, and

(c) by reason of the individual’s employment as a home care
worker.”

(3) In section 228 (effect of exemptions on liability under provisions outside Part
402), in subsection (2)(d), after “291” insert “and 306A”.

(4) The amendments made by this section have effect for the tax year 2016-17 and
subsequent tax years.

15 Lump sums provided under armed forces early departure scheme

(1) In section 640A of ITEPA 2003 (lump sums provided under armed forces early
departure scheme), at the end insert “or the Armed Forces Early Departure
Payments Scheme Regulations 2014 (S.I. 2014/2328S.I. 2014/2328)”.

(2) 5Subsection (1) comes into force on 1 April 2015.

16 Bereavement support payment: exemption from income tax

(1) ITEPA 2003 is amended as follows.

(2) In Part 1 of Table B in section 677(1) (UK social security benefits wholly exempt
from tax), at the appropriate place insert—

(3) 15In Part 1 of Schedule 1 (abbreviations of Acts and instruments), at the
appropriate place insert—

(4) The amendments made by this section have effect in accordance with
regulations made by the Treasury.

(5) 20Regulations under subsection (4) may make different provision for different
purposes.

(6) Section 1014(4) of ITA 2007 (regulations etc subject to annulment) does not
apply in relation to regulations under subsection (4).

17 PAYE: benefits in kind

(1) 25Section 684 of ITEPA 2003 (PAYE regulations) is amended as follows.

(2) In the list in subsection (2), after item 1 insert—

“1ZA Provision—

(a) for authorising a person (“P”), in a case where the PAYE
income of an employee (whether an employee of P or of
30another person) includes an amount charged to tax under
any of Chapters 3 and 5 to 10 of Part 3 in respect of the
provision of a benefit of a specified kind—

(i) to make deductions of income tax in respect of the
benefit from any payment or payments actually made
35of, or on account of, PAYE income of the employee, or

(ii) to make repayments of such income tax,

(b) for any such deductions or repayments to be made at a
specified time,

(c) for the amount of any such deductions or repayments to be
calculated in accordance with the regulations,

(d) 5for the provision of the benefit to be treated for specified
purposes as a payment of PAYE income, and

(e) for making persons who make any such deductions or
repayments accountable to or, as the case may be, entitled to
repayment from the Commissioners.”

(3) 10For subsection (3) substitute—

“(3) The deductions of income tax—

(a) required to be made by PAYE regulations under item 1 in the
above list, or

(b) which a person is authorised to make by PAYE regulations
15under item 1ZA in that list,

may be required to be made at the basic rate or other rates in such cases
or classes of case as may be provided by the regulations.”

18 Employment intermediaries: determination of penalties

(1) Section 100 of TMA 1970 (determination of penalties by officer of Board) is
20amended as follows.

(2) In subsection (2)(c), after “those amendments” insert “, subject to subsection
(2A)”.

(3) After subsection (2) insert—

“(2A) Subsection (2)(c) does not exclude the application of subsection (1)
25where the penalty relates to a failure to furnish any information or
produce any document or record in accordance with regulations under
section 716B of ITEPA 2003 (employment intermediaries to keep,
preserve and provide information etc).”

19 Arrangements offering a choice of capital or income return

(1) 30Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc from UK resident companies
and tax credits etc in respect of certain distributions) is amended in accordance
with subsections (2) to (6).

(2) After section 396 insert—

“Other amounts treated as distributions

396A 35Arrangements offering a choice of capital or income return

(1) Subsection (2) applies if a person (“S”) has a choice either—

(a) to receive what would (ignoring this section) be a distribution
of a company, or

(b) to receive from that company, or from a third party, anything
40else (“the alternative receipt”) which—

(i) is of the same or substantially the same value, and

(ii) (ignoring this section) would not be charged to income
tax.

(2) If S chooses the alternative receipt—

(a) for income tax purposes it is treated as a distribution made to S
5by that company in the tax year in which it is received by S, and

(b) for the purposes of the following provisions it is treated as a
qualifying distribution so made—

(i) section 397 (tax credits for qualifying distributions of
UK residence companies: UK residents and eligible non-
10UK residents);

(ii) section 399 (qualifying distributions received by
persons not entitled to tax credits);

(iii) section 1100 of CTA 2010 (qualifying distributions: right
to request a statement).

(3) 15For the purposes of this section—

(a) it does not matter if the choice mentioned in subsection (1) is
subject to any conditions being met or to the exercise of any
power;

(b) where S is offered one thing subject to a right, however
20expressed, to choose another instead, S is to be regarded as
making a choice if S abandons or fails to exercise such a right.

(4) If at any time a tax other than income tax (“the other tax”) is charged in
relation to the alternative receipt, in order to avoid a double charge to
tax in respect of that receipt, a person may make a claim for one or more
25consequential adjustments to be made in respect of the other tax.

(5) On a claim under subsection (4) an officer of Revenue and Customs
must make such of the consequential adjustments claimed (if any) as
are just and reasonable.

(6) Consequential adjustments may be made—

(a) 30in respect of any period,

(b) by way of an assessment, the modification of an assessment, the
amendment of a claim, or otherwise, and

(c) despite any time limit imposed by or under an enactment.”

(3) In section 382 (contents of Chapter 3), in subsection (1), omit the “and” at the
35end of paragraph (b) and after paragraph (c) insert “, and

“(d) treats distributions as made in some circumstances (see section
396A).”

(4) In section 385 (person liable), in subsection (1)(a) for “and 389(3)” substitute “,
389(3) and 396A”.

(5) 40In section 397 (tax credits for qualifying distributions of UK resident
companies: UK residents and eligible non-UK residents), after subsection (5)
insert—

“(5A) This section needs to be read with section 396A(2) (which treats certain
receipts as “qualifying distributions” for the purposes of this section).”

(6) 45In section 399 (qualifying distributions received by persons not entitled to tax

credits), after subsection (5) insert—

“(5A) This section needs to be read with section 396A(2) (which treats certain
receipts as “qualifying distributions” for the purposes of this section).”

(7) In section 481 of ITA 2007 (other amounts to be charged at special rates for
5trustees), in subsection (3), after “Type 1” insert “or Type 12”.

(8) In section 482 of that Act (types of amount to be charged at special rates for
trustees), at the end insert—

“Type 12 Income treated as arising to the trustees under section 396A of
ITTOIA 2005 (arrangements offering a choice of income or capital
10return).”

(9) In section 1100 of CTA 2010 (qualifying distributions: right to request a
statement), after subsection (6) insert—

“(7) This section needs to be read with section 396A(2) of ITTOIA 2005
(which treats certain receipts as “qualifying distributions” for the
15purposes of this section).”

(10) The amendments made by subsections (2) to (4), (7) and (8) have effect in
relation to things received on or after 6 April 2015 (even if the choice to receive
them was made before that date).

20 Intermediaries and Gift Aid

(1) 20Chapter 2 of Part 8 of ITA 2007 (gift aid) is amended as follows.

(2) In section 416 (meaning of “qualifying donation” for the purpose of gift aid
relief)—

(a) in subsection (1)(b)—

(i) after “the individual” insert “, or an intermediary representing
25the individual,” and

(ii) after “the charity” insert “, or an intermediary representing the
charity,”, and

(b) after subsection (1) insert—

“(1A) For the purpose of subsection (1)(b) an intermediary is—

(a) 30a person authorised by the individual to give a gift aid
declaration on behalf of that individual to the charity,

(b) a person authorised by a charity to receive a gift aid
declaration on behalf of that charity, or

(c) a person authorised to perform both of the roles
35described in paragraphs (a) and (b).”

(3) For section 428(3) (regulations in relation to gift aid declarations) substitute—

“(3) The regulations may also require—

(a) charities, or intermediaries within the meaning of section
416(1A), to keep records with respect to declarations received
40from individuals or from those intermediaries,

(b) charities or intermediaries to produce, for inspection by an
officer of Revenue and Customs, any records required to be
kept by those charities or intermediaries by regulations made
under paragraph (a), and

(c) intermediaries to provide statements of account, and other
specified information relating to declarations made, in such
form and at such times as may be specified, to individuals who
have authorised those intermediaries to give those declarations
5to charities on their behalf.

(4) The regulations may also make different provision for different cases or
circumstances, including—

(a) different provision for declarations made in a different manner
or by different descriptions of persons, and

(b) 10different provision depending on whether or not an
intermediary, within the meaning of section 416(1A), is
involved in the giving or receiving of the declaration.”

(4) The amendments made by this section have effect in relation to gifts made on
or after a day appointed in regulations made by the Treasury.

(5) 15Section 1014(4) of ITA 2007 (regulations etc subject to annulment) does not
apply to regulations under subsection (4).

21 Disguised investment management fees

(1) In Part 13 of ITA 2007 (tax avoidance), after Chapter 5D insert—

“CHAPTER 5E Disguised investment management fees

809EZA 20 Disguised investment management fees: charge to income tax

(1) Where one or more disguised fees arise to an individual in a tax year
from one or more investment schemes (whether or not by virtue of the
same arrangements), the individual is liable for income tax for the tax
year in respect of the disguised fee or fees as if—

(a) 25the individual were carrying on a trade for the tax year,

(b) the disguised fee or fees were the profits of the trade of the tax
year, and

(c) the individual were the person receiving or entitled to those
profits.

(2) 30For the purposes of subsection (1) the trade is treated as carried on—

(a) in the United Kingdom, to the extent that the individual
performs the relevant services in the United Kingdom;

(b) outside the United Kingdom, to the extent that the individual
performs the relevant services outside the United Kingdom;

35and for this purpose “the relevant services” means the investment
management services by virtue of which the disguised fee or fees arise
to the individual in the tax year.

(3) For the purposes of this Chapter a “disguised fee” arises to an
individual in a tax year from an investment scheme if—

(a) 40the individual performs investment management services
directly or indirectly in respect of the scheme under any
arrangements,

(b) the arrangements involve at least one partnership,

(c) under the arrangements, a management fee arises to the
individual directly or indirectly from the scheme in the tax year
(see section 809EZB), and

(d) some or all of the management fee is untaxed;

5and the amount of the disguised fee is so much of the management fee
as is untaxed.

(4) For the purposes of subsection (3) the management fee is “untaxed” if
and to the extent that the fee would not (apart from this section)—

(a) be charged to tax under ITEPA 2003 as employment income of
10the individual for any tax year, or

(b) be brought into account in calculating the profits of a trade of
the individual for the purposes of income tax for any tax year.

(5) In subsection (4) “trade” includes profession or vocation.

(6) In this Chapter “investment scheme” means—

(a) 15a collective investment scheme, or

(b) an investment trust.

809EZB Meaning of “management fee” in section 809EZA

(1) Subject as follows, for the purposes of section 809EZA “management
fee” means any sum (including a sum in the form of a loan or advance
20or an allocation of profits) except so far as the sum constitutes—

(a) a repayment (in whole or part) of an investment made directly
or indirectly by the individual in the scheme,

(b) an arm’s length return on an investment made directly or
indirectly by the individual in the scheme, or

(c) 25carried interest (see sections 809EZC and 809EZD).

(2) For the purposes of subsection (1)(b) a return on an investment is “an
arm’s length return” if—

(a) the return is on an investment which is of the same kind as
investments in the scheme made by external investors,

(b) 30the return on the investment is reasonably comparable to the
return to external investors on those investments, and

(c) the terms governing the return on the investment are
reasonably comparable to the terms governing the return to
external investors on those investments.

(3) 35In this Chapter “sum” includes any money or money’s worth (and
other expressions are to be construed accordingly).

(4) Where—

(a) a sum in the form of money’s worth arises to the individual
from the scheme in the ordinary course of the scheme’s
40business, and

(b) the individual gives the scheme money in exchange for the sum,

the sum constitutes a “management fee” only to the extent that its
market value at the time it arises exceeds the amount of the money
given by the individual.