Finance (No. 2) Bill

Finance (No. 2) Bill - continued	House of Commons
PART III, INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX - continued

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Benefits in kind

Car fuel.

59. - (1) In section 158 of the Taxes Act 1988 (car fuel) for the Tables in subsection (2) (tables of cash equivalents) there shall be substituted-

"TABLE A
Cylinder capacity of car in cubic centimetres	Cash equivalent
1,400 or less	£1,010
More than 1,400 but not more than 2,000	£1,280
More than 2,000	£1,890

TABLE AB
Cylinder capacity of car in cubic centimetres	Cash equivalent
2,000 or less	£1,280
More than 2,000	£1,890

TABLE B
Description of car	Cash equivalent
Any car	£1,890"

(2) This section shall have effect for the year 1998-99 and subsequent years of assessment.

Reductions for road fuel gas cars.

60. - (1) In subsection (1) of section 168A of the Taxes Act 1988 (price of a car as regards year), for the words "sections 168B to 168G" there shall be substituted the words "sections 168AB to 168G".

(2) In subsection (11) of that section, after the words "section 168AA" there shall be inserted the words "or 168AB(1)".

(3) After section 168AA of that Act there shall be inserted the following section-

"Equipment etc. to enable car to run on road fuel gas.	168AB. - (1) Equipment by means of which the car is capable of running on road fuel gas shall not be regarded as an accessory for the purposes of section 168A.
	(2) Where the car is manufactured in such way as to be capable of running on road fuel gas, the price of the car as regards each relevant year shall be treated as the price given by section 168A, reduced by so much of that price as it is reasonable to attribute to the car's being manufactured in that way rather than in such a way as to be capable of running only on petrol.
	(3) In this section "road fuel gas" means any substance which is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and which is for use as fuel in road vehicles."

(4) In subsection (2) of section 168B of that Act (accessories not included in list price), for the words "section 168A" there shall be substituted the words "sections 168A and 168AB".

(5) In subsection (2) of section 168C of that Act (accessories available after car first made available), for the words "sections 168A and 168B" there shall be substituted the words "sections 168A to 168B".

(6) This section has effect for the year 1999-00 and subsequent years of assessment.

Travelling expenses.

61. - (1) For subsections (1) to (1B) of section 198 of the Taxes Act 1988 (relief for necessary expenses) substitute-

	"(1) If the holder of an office or employment is obliged to incur and defray out of the emoluments of the office or employment-
	(a) qualifying travelling expenses, or
	(b) any amount (other than qualifying travelling expenses) expended wholly, exclusively and necessarily in the performance of the duties of the office or employment,
	there may be deducted from the emoluments to be assessed the amount so incurred and defrayed.
	(1A) "Qualifying travelling expenses" means-
	(a) amounts necessarily expended on travelling in the performance of the duties of the office or employment, or
	(b) other expenses of travelling which-
	(i) are attributable to the necessary attendance at any place of the holder of the office or employment in the performance of the duties of the office or employment, and
	(ii) are not expenses of ordinary commuting or private travel.
	What is ordinary commuting or private travel for this purpose is defined in Schedule 12A.
	(1B) Expenses of travel by the holder of an office or employment between two places at which he performs duties of different offices or employments under or with companies in the same group are treated as necessarily expended in the performance of the duties which he is to perform at his destination.
	For this purpose companies are taken to be members of the same group if, and only if, one is a 51% subsidiary of the other or both are 51% subsidiaries of a third company.".

(2) In the Taxes Act 1988 insert as Schedule 12A the Schedule set out in Schedule 10 to this Act.

(3) This section has effect for the year 1998-99 and subsequent years of assessment.

Profit-related pay

Provision preventing manipulation of profit periods.

62. Schedule 11 to this Act (which makes provision to prevent the manipulation of profit periods in relation to the phasing out of relief for profit-related pay) shall have effect.

Foreign earnings deduction

Withdrawal except in relation to seafarers.

63. - (1) Section 193(1) of the Taxes Act 1988 (Schedule E foreign earnings deduction) shall cease to have effect.

(2) Before that section insert-

"Foreign earnings deduction for seafarers.	192A. - (1) Where in any year of assessment-
	(a) the duties of an employment as a seafarer are performed wholly or partly outside the United Kingdom, and
	(b) any of those duties are performed in the course of a qualifying period (within the meaning of Schedule 12) which falls wholly or partly in that year and consists of at least 365 days,
	then, in charging tax under Case I of Schedule E on the amount of the emoluments from that employment attributable to that period, or to so much of it as falls in that year of assessment, there shall be allowed a deduction equal to the whole of that amount.
	(2) In subsection (1) employment "as a seafarer" means an employment consisting of the performance of duties on a ship (or of such duties and others incidental to them).
	(3) For the purposes of this section a "ship" does not include-
	(a) any offshore installation within the meaning of the Mineral Workings (Offshore Installations) Act 1971, or
	(b) what would be such an installation if the references in that Act to controlled waters were to any waters.
	(4) Schedule 12 has effect for the purpose of supplementing this section.".

(3) The references in the Taxes Act 1988 to section 193(1) are amended as follows-

(a) in section 19(1), in Case I of Schedule E, omit the words from "and to section 193(1)" to the end;

(b) in paragraph 10 of Schedule 11 after "193(1)" insert "or 192A";

(4) In Schedule 12 to that Act-

(a) in paragraph 3(2) (qualifying periods)-

(i) in paragraph (a) for "62" substitute "183", and

(ii) in paragraph (b) for "one-sixth" substitute "one-half";

(b) in paragraph 5 (duties treated as performed outside the United Kingdom)-

(i) for "vessel or aircraft" substitute "ship (within the meaning of section 192A)", and

(ii) in paragraphs (a) and (b) for "voyage or journey" substitute "voyage".

(5) Subsections (1) to (4) above have effect in relation to-

(a) emoluments attributable to qualifying periods beginning on or after 17th March 1998, and

(b) emoluments attributable to qualifying periods beginning before 17th March 1998 which are received on or after that date.

(6) Nothing in those subsections affects the question what deduction (if any) falls to be made under section 193(1) of the Taxes Act 1988 in the case of emoluments attributable to a qualifying period beginning before 17th March 1998 and received before that date.

(7) For the purposes of subsections (5) and (6) above the question whether emoluments are attributable to a qualifying period beginning before 17th March 1998 shall be determined without reference to any arrangements entered into on or after that date.

Prepared 6 April 1998