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209 Meaning of “persons providing benefit” | |
For the purposes of this Chapter the persons providing a benefit are the person | |
or persons at whose cost the benefit is provided. | |
210 Power to exempt minor benefits | |
(1) The Treasury may make provision by regulations for exempting from the | 5 |
application of this Chapter such minor benefits as may be specified in the | |
regulations. | |
(2) An exemption conferred by such regulations is conditional on the benefit being | |
made available to the employer’s employees generally on similar terms. | |
Special rules for scholarships | 10 |
211 Special rules for scholarships: introduction | |
(1) Sections 212 to 214 supplement the preceding provisions of this Chapter in the | |
following ways— | |
section 212 provides for certain scholarships provided under | |
arrangements entered into by an employer or a connected person to be | 15 |
regarded as provided by reason of an employment; | |
section 213 provides that this Chapter does not apply to certain | |
scholarships provided under a trust fund or a scheme; | |
section 214 provides a different method of determining the cost of an | |
employment-related benefit if it consists in the provision of a | 20 |
scholarship from a trust fund. | |
(2) Section 215 limits the extent to which section 331 of ICTA (exemption for | |
scholarship income) applies to a scholarship whose provision constitutes an | |
employment-related benefit. | |
(3) In this section and sections 212 to 215 “scholarship” includes a bursary, | 25 |
exhibition or other similar educational endowment. | |
212 Scholarships provided under arrangements entered into by employer or | |
connected person | |
(1) A scholarship which is provided for a member of an employee’s family or | |
household is to be regarded for the purposes of this Chapter as provided by | 30 |
reason of the employment if it is provided under arrangements entered into | |
by— | |
(a) the employer, or | |
(b) a person connected with the employer. | |
(2) Subsection (1) applies whether or not the arrangements require the employer | 35 |
or the connected person to contribute directly or indirectly to the cost of | |
providing the scholarship. | |
(3) A scholarship is not to be regarded as provided by reason of an employment | |
by virtue of subsection (1) if— | |
(a) the employer is an individual, and | 40 |
(b) the arrangements are made in the normal course of the employer’s | |
domestic, family or personal relationships. | |
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(4) This section is without prejudice to section 201(3). | |
213 Exception for certain scholarships under trusts or schemes | |
(1) This Chapter does not apply to an employment-related benefit consisting in the | |
provision of a scholarship if conditions A, B, C and D are met. | |
(2) Condition A is that the scholarship would not be regarded as provided by | 5 |
reason of the employment if section 201(3) and section 212 were disregarded. | |
(3) Condition B is that the holder of the scholarship is a full-time student. | |
(4) Condition C is that the scholarship is provided from a trust fund or under a | |
scheme. | |
(5) Condition D is that, in the tax year in which the scholarship is provided, not | 10 |
more than 25% of the total amount of relevant payments is attributable to | |
scholarships provided by reason of a person’s employment. | |
(6) For the purposes of conditions B and D “full-time student” means a person | |
who is in full-time education at a university, college, school or other | |
educational establishment. | 15 |
(7) For the purposes of condition D— | |
“employment” includes any employment within the meaning of the | |
employment income Parts (see section 4), whether or not it is a taxable | |
employment under Part 2; | |
“relevant payments” means the payments made from the fund or scheme | 20 |
mentioned in condition C in respect of scholarships held by full-time | |
students. | |
214 Scholarships: cost of the benefit | |
If an employment-related benefit consists in the provision of a scholarship | |
from a trust fund— | 25 |
(a) section 204 does not apply, and | |
(b) the cost of the benefit is the total of the payments made from the fund | |
to the person holding the scholarship. | |
215 Limitation of exemption for scholarship income in section 331 of ICTA | |
If an employment-related benefit consists in the provision of a scholarship, | 30 |
section 331(1) of ICTA (exemption for scholarship income) applies only in | |
relation to the holder of the scholarship. | |
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Chapter 11 | |
Taxable benefits: exclusion of lower-paid employments from parts of benefits | |
code | |
Introduction | |
216 Provisions not applicable to lower-paid employments | 5 |
(1) The Chapters of the benefits code listed in subsection (4) do not apply to an | |
employment in relation to a tax year if— | |
(a) it is lower-paid employment in relation to that year (see section 217), | |
and | |
(b) condition A or B is met. | 10 |
(2) Condition A is that the employee is not employed as a director of a company. | |
(3) Condition B is that the employee is employed as a director of a company but | |
has no material interest in the company and either— | |
(a) the employment is as a full-time working director, or | |
(b) the company is non-profit-making or is established for charitable | 15 |
purposes only. | |
“Non-profit-making” means that the company does not carry on a trade and its | |
functions do not consist wholly or mainly in the holding of investments or | |
other property. | |
(4) The Chapters referred to in subsection (1) are— | 20 |
Chapter 3 (taxable benefits: expenses payments); | |
Chapter 6 (taxable benefits: cars, vans and related benefits); | |
Chapter 7 (taxable benefits: loans); | |
Chapter 8 (taxable benefits: notional loans in respect of acquisitions of | |
shares); | 25 |
Chapter 9 (taxable benefits: disposals of shares for more than market | |
value); | |
Chapter 10 (taxable benefits: residual liability to charge). | |
(5) Subsection (1)— | |
(a) means that in any of those Chapters a reference to an employee does | 30 |
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 applies, but | |
(b) does not restrict the meaning of references to employees in other | |
contexts. | 35 |
(6) Subsection (1) has effect subject to— | |
section 188(2) (discharge of loan: where employment becomes lower- | |
paid), | |
section 195(3) (discharge of notional loan: where employment becomes | |
lower-paid), | 40 |
section 199(4) (disposal for more than market value: where employment | |
becomes lower-paid), and | |
section 220 (employment in two or more related employments). | |
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What is lower-paid employment | |
217 Meaning of “lower-paid employment” | |
(1) For the purposes of this Chapter an employment is “lower-paid employment” | |
in relation to a tax year if the earnings rate for the employment for the year | |
(calculated under section 218) is less than £8,500. | 5 |
(2) Subsection (1) is subject to section 220 (employment in two or more related | |
employments). | |
218 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— | 10 |
Step 1 | |
Find the total of the following amounts— | |
(a) the total amount of the earnings from the employment for the year | |
within Chapter 1 of this Part, | |
(b) the total of any amounts that are treated as earnings from the | 15 |
employment for the year under the benefits code (see subsections (2) | |
and (3)), | |
(c) the total of any amounts that are treated as earnings from the | |
employment for the year under Chapter 12 of this Part (payments | |
treated as earnings), and | 20 |
(d) in the case of an employment within section 56(2) (deemed | |
employment of worker by intermediary), the amount of the deemed | |
employment payment for the year (see section 54), | |
excluding any exempt income. | |
Step 2 | 25 |
Add to that total any extra amount required to be added for the year by section | |
219 (extra amounts to be added in connection with a car). | |
| |
Step 3 | |
Subtract the total amount of any authorised deductions (see subsection (4)) | 30 |
from the result of step 2. | |
| |
Step 4 | |
The earnings rate for the employment for the year is given by the formula— | |
![equation: cross[char[R],over[char[Y],char[E]]]](missing.gif) | 35 |
where— | |
R is the result of step 3, | |
Y is the number of days in the year, and | |
E is the number of days in the year when the employment is held. | |
(2) Section 216(1) (provisions not applicable to lower-paid employment) is to be | 40 |
disregarded for the purpose of determining any amount under step 1. | |
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(3) If the benefit of living accommodation is to be taken into account under step 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 | 5 |
amount within Step 1 under— | |
section 346 (employee liabilities), | |
section 352 (agency fees paid by entertainers), | |
section 355 (corresponding payments by non-domiciled employees with | |
foreign employers), | 10 |
section 368 (fixed sum deductions from earnings payable out of public | |
revenue), | |
section 370 (travel costs and expenses where duties performed abroad: | |
employee’s travel), | |
section 371 (travel costs and expenses where duties performed abroad: | 15 |
visiting spouse’s or child’s travel), | |
section 373 (non-domiciled employee’s travel costs and expenses where | |
duties performed in UK), | |
section 374 (non-domiciled employee’s spouse’s or child’s travel costs | |
and expenses where duties performed in UK), | 20 |
section 376 (foreign accommodation and subsistence costs and expenses | |
(overseas employments)), | |
section 377 (costs and expenses in respect of personal security assets and | |
services), | |
section 713 (payroll giving to charities), | 25 |
section 592(7) of ICTA (contributions to exempt approved schemes), | |
section 594 of ICTA (contributions to exempt statutory schemes), or | |
section 262 of CAA 2001 (capital allowances to be given effect by treating | |
them as deductions). | |
219 Extra amounts to be added in connection with a car | 30 |
(1) The provisions of this section apply for the purposes of section 218(1) in the | |
case of a tax year in which a car is made available as mentioned in section | |
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 | 35 |
(b) the amount that would be earnings within Chapter 1 of this Part if the | |
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 | |
218(1). | 40 |
(4) For 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 this Part), and | |
(b) the cash equivalent (calculated in accordance with that Chapter) of the | 45 |
benefit of any fuel provided for the car by reason of the employment. | |
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(5) Subsection (6) applies if in the tax year there would be an amount of general | |
earnings consisting of— | |
(a) earnings within Chapter 1 of this Part, or | |
(b) an amount treated as earnings from the employment under Chapter 3 | |
(expenses) or Chapter 4 (vouchers and credit-tokens) of this Part, | 5 |
if section 239 or 269 (exemptions in respect of payments or benefits connected | |
with taxable cars etc.) did not apply to the discharge of a liability, or to a | |
payment or benefit, in connection with the car. | |
(6) The amount of general earnings mentioned in subsection (5) is an extra amount | |
to be added under step 2 in section 218(1). | 10 |
(7) Section 216(1) (provisions not applicable to lower-paid employment) is to be | |
disregarded for the purpose of determining any amount under this section. | |
Treatment of related employments | |
220 Related employments | |
(1) This section applies if a person is employed in two or more related | 15 |
employments. | |
(2) None of the employments is to be regarded as lower-paid employment 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 218) is £8,500 or more, or | 20 |
(b) any of them is an employment falling outside the exclusion contained | |
in section 216(1) (provisions not applicable to lower-paid employment). | |
(3) For the purposes of this section two employments are “related” if— | |
(a) both are with the same employer, or | |
(b) one is with a body or partnership (“A”) and the other is either— | 25 |
(i) with an individual, partnership or body that controls A (“B”), or | |
(ii) with another partnership or body also controlled by B. | |
Chapter 12 | |
Payments treated as earnings | |
221 Payments where employee absent because of sickness or disability | 30 |
(1) This section applies if— | |
(a) an employee is absent from work because of sickness or disability, and | |
(b) a qualifying sickness payment is made in respect of the employee’s | |
absence from work. | |
(2) But this section does not apply if the qualifying sickness payment constitutes | 35 |
earnings from the employment by virtue of any other provision. | |
(3) The qualifying sickness payment is to be treated as earnings from the | |
employment in respect of the period of absence. | |
(4) If the qualifying sickness payment is made from funds to which the employer | |
and the employer’s employees have made contributions, only the amount of | 40 |
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(4) the payment which it is just and reasonable to attribute to the employer’s | |
contributions is treated as earnings under this section. | |
(5) In this section “qualifying sickness payment” means a payment which meets | |
conditions A and B. | |
(6) Condition A is that the payment is made— | 5 |
(a) to the employee or to a member of the employee’s family, | |
(b) to the order of such a person, or | |
(c) to the benefit of such a person. | |
(7) Condition B is that the payment is made— | |
(a) by reason of the employment, and | 10 |
(b) as a result of arrangements entered into by the employer. | |
222 Payments by employer on account of tax where deduction not possible | |
(1) This section applies if— | |
(a) an employer is treated by virtue of sections 687, 689 and 693 to 700 as | |
having made a payment of income of an employee (“the notional | 15 |
payment”), | |
(b) the employer is required by virtue of section 710(4) to account to the | |
Inland Revenue for an amount of income tax (“the due amount”) in | |
respect of the notional payment, and | |
(c) the employee does not, before the end of the period of 30 days | 20 |
beginning with the date on which the employer is treated as making the | |
notional payment, make good the due amount to the employer. | |
(2) The due amount is to be treated as earnings from the employment for the tax | |
year in which the date mentioned in subsection (1)(c) falls. | |
(3) In this section “employer”, in relation to any provision of sections 687, 689, 693 | 25 |
to 700 or 710, means the person taken to be the employer for the purposes of | |
that provision. | |
It also includes a person who is treated as making a payment of PAYE income | |
by virtue of section 689(2) (payments by person for whom employee works but | |
who is not the employer). | 30 |
223 Payments on account of director’s tax other than by the director | |
(1) This section applies if in a tax year— | |
(a) a person (“P”) makes a payment to another person who is employed as | |
the director of a company, | |
(b) the payment is of, or on account of, earnings from the director’s | 35 |
employment, | |
(c) PAYE regulations require P to deduct an amount of income tax (“the | |
deductible tax”), | |
(d) P deducts none, or only some, of the deductible tax, and | |
(e) either or both of the following occur— | 40 |
(i) P accounts to the Board of Inland Revenue for some or all of the | |
deductible tax (whether or not P has actually deducted the | |
amount accounted for); | |
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