|
| |
| |
388 Apportionment of payments in respect of more than one employee | |
(1) If a sum within section 386 is paid for or in respect of two or more employees, | |
part of it is treated as paid in respect of each of them. | |
(2) The amount treated as paid in respect of each employee is—![equation: cross[char[A],over[char[B],char[C]]]](missing.gif) | |
where— | 5 |
A is the sum paid, | |
B is the amount which would have had to be paid to secure the benefits to | |
be provided in respect of the employee in question, and | |
C is the total amount which would have had to be paid to secure the | |
benefits to be provided in respect of all the employees if separate | 10 |
payments had been made in the case of each of them. | |
389 Exception: employments where earnings charged on remittance | |
(1) Section 386 does not apply if in the tax year in which the sum is paid the | |
earnings from the employment are earnings charged on remittance (or would | |
be if there were any earnings). | 15 |
(2) In subsection (1) “earnings charged on remittance” means earnings which are | |
taxable earnings under— | |
(a) section 22 (chargeable overseas earnings for year when employee | |
resident and ordinarily resident, but not domiciled, in UK), or | |
(b) section 26 (foreign earnings for year when employee resident, but not | 20 |
ordinarily resident, in UK). | |
390 Exception: non-domiciled employees with foreign employers | |
Section 386 does not apply if— | |
(a) the employee is not domiciled in the United Kingdom in the tax year in | |
which the sum is paid, | 25 |
(b) the employment is with a foreign employer, and | |
(c) on a claim made by the employee the Board of Inland Revenue are | |
satisfied that the scheme corresponds to a scheme within section | |
387(2)(a), (b) or (c). | |
391 Exception: seafarers with overseas earnings | 30 |
Section 386 does not apply if— | |
(a) the sum is paid in a period that is an eligible period in relation to the | |
employee’s employment for the purposes of Chapter 6 of Part 5 | |
(deductions from seafarers’ earnings) (see section 378(2)), and | |
(b) a deduction is allowed under section 378 from the employee’s earnings | 35 |
that are attributable to that period. | |
392 Relief where no benefits are paid or payable | |
(1) An application for relief may be made to the Inland Revenue if— | |
(a) a sum is charged to tax by virtue of section 386 in respect of the | |
provision of any benefits, | 40 |
| |
| |
|
| |
| |
(b) no payment in respect of, or in substitution for, the benefits has been | |
made, and | |
(c) an event occurs by reason of which no such payment will be made. | |
(2) The application must be made within 6 years from the time when the event | |
occurs. | 5 |
(3) The application must be made by the employee or, if the employee has died, | |
the employee’s personal representatives. | |
(4) If the Inland Revenue are satisfied that the conditions in subsection (1) are met | |
in relation to the whole sum, they must give relief in respect of tax on it by | |
repayment or otherwise as appropriate, unless subsection (6) applies. | 10 |
(5) If the Inland Revenue are satisfied that the conditions in subsection (1) are met | |
in relation to part of the sum, they may give such relief in respect of tax on it as | |
is just and reasonable, unless subsection (6) applies. | |
(6) This subsection applies if— | |
(a) the reason why no payment has been made in respect of, or in | 15 |
substitution for, the benefits, or | |
(b) the event by reason of which there will be no such payment, | |
is a reduction or cancellation of the employee’s rights in respect of the benefits, | |
or part of the benefits, as a consequence of a pension sharing order or | |
provision. | 20 |
(7) In subsection (6) “pension sharing order or provision” means any such order | |
or provision as is mentioned in— | |
(a) section 28(1) of WRPA 1999 (rights under pension sharing | |
arrangements), or | |
(b) Article 25(1) of WRP(NI)O 1999 (provision for Northern Ireland | 25 |
corresponding to section 28(1) of WRPA 1999). | |
Chapter 2 | |
Benefits from non-approved pension schemes | |
Benefits treated as employment income | |
393 Application of this Chapter | 30 |
(1) This Chapter applies to any benefit provided under a non-approved retirement | |
benefits scheme. | |
(2) But this Chapter does not apply to a benefit which is charged to tax under Part | |
9 (pension income). | |
394 Charge on benefit to which this Chapter applies | 35 |
(1) If a benefit to which this Chapter applies is received by an individual, the | |
amount of the benefit counts as employment income of the individual for the | |
relevant tax year. | |
(2) If a benefit to which this Chapter applies is received by a person who is not an | |
individual, the administrator of the scheme under which the benefit is | 40 |
| |
| |
|
| |
| |
(2) provided is chargeable to tax under Case VI of Schedule D on the amount of | |
the benefit for the relevant tax year. | |
(3) In subsections (1) and (2) the “relevant tax year” is the tax year in which the | |
benefit is received. | |
(4) For the purposes of subsection (2), the rate of tax is 40% or such other rate as | 5 |
may for the time being be specified by the Treasury by order. | |
(5) No liability to income tax arises by virtue of any other provision of this Act in | |
respect of a benefit to which this Chapter applies. | |
395 Application of sections 396 and 397: general rules | |
(1) Section 394 is subject to— | 10 |
(a) section 396 (which provides that certain lump sums are not taxed by | |
virtue of section 394), and | |
(b) section 397 (which provides for the calculation of the amount taxed by | |
virtue of section 394 in relation to certain lump sums). | |
(2) Section 396 applies in relation to a lump sum only if the condition in subsection | 15 |
(4) below is met. | |
(3) Section 397 applies in relation to a lump sum only if— | |
(a) the condition in subsection (4) below is met, or | |
(b) an employee has paid any sum or sums with a view to the provision of | |
any relevant benefits under the scheme under which the lump sum is | 20 |
provided. | |
(4) The condition mentioned in subsections (2) and (3)(a) is that— | |
(a) an employer has paid any sum or sums with a view to the provision of | |
any relevant benefits under the scheme under which the lump sum is | |
provided, and | 25 |
(b) an employee has been assessed to tax in respect of the sum or sums so | |
paid— | |
(i) by virtue of section 595(1) of ICTA, or | |
(ii) by virtue of the sum or sums counting as employment income | |
of the employee under section 386(1) of this Act. | 30 |
(5) For the purposes of this section it must be assumed that, unless the contrary is | |
shown— | |
(a) no sums have been paid with a view to the provision of relevant | |
benefits, and | |
(b) an employee has not been assessed in respect of a sum or sums as | 35 |
mentioned in subsection (4)(b). | |
396 Certain lump sums not taxed by virtue of section 394 | |
(1) Section 394 does not apply to a lump sum if— | |
(a) all of the income and gains accruing to the scheme under which the | |
lump sum is provided are brought into charge to tax, and | 40 |
(b) the lump sum is provided to— | |
(i) the employee mentioned in section 395(4)(b), | |
(ii) a relative of that employee, | |
(iii) the personal representatives of that employee, | |
| |
| |
|
| |
| |
(iv) an ex-spouse of that employee, or | |
(v) any other individual designated by that employee. | |
(2) For the purposes of this section it must be assumed that, unless the contrary is | |
shown, the income and gains accruing to the scheme are not brought into | |
charge to tax. | 5 |
397 Certain lump sums: calculation of amount taxed by virtue of section 394 | |
(1) In a case where— | |
(a) section 394 applies to a lump sum, and | |
(b) any of the income or gains accruing to the scheme under which the | |
lump sum is provided is not brought into charge to tax, | 10 |
the amount which by virtue of that section counts as employment income, or | |
is chargeable to tax under Case VI of Schedule D, is determined in accordance | |
with this section. | |
(2) That amount is the amount of the lump sum reduced by the deduction | |
applicable under subsection (3) or (4). | 15 |
(3) Subject to subsection (4), the deduction applicable is the aggregate of— | |
(a) the sum or sums mentioned in section 395(3)(b) (if any), and | |
(b) the sum or sums mentioned in section 395(4)(b) (if any), | |
which in either case were paid by way of contribution to the provision of the | |
lump sum. | 20 |
(4) The deduction applicable is calculated in accordance with the formula in | |
subsection (6) if— | |
(a) the lump sum is provided under the scheme on the disposal of a part of | |
any asset or the surrender of any part of or share in any rights in any | |
asset, and | 25 |
(b) a person falling within subsection (5) has a right to receive, or any | |
expectation of receiving, a further lump sum or further lump sums | |
under the scheme on a further disposal of any part of the asset or a | |
further surrender of any part of or share in any rights in the asset. | |
(5) The persons referred to in subsection (4)(b) are— | 30 |
(a) the employee, | |
(b) a relative of that employee, | |
(c) the personal representatives of that employee, or | |
(d) any person connected with that employee. | |
(6) The formula referred to in subsection (4) is— | 35 |
where— | |
D is the deduction applicable; | |
S is the aggregate amount of any sum or sums of a description mentioned | |
in paragraphs (a) and (b) of subsection (3); | |
LS is the amount of the lump sum received in relation to which the | 40 |
deduction applicable falls to be determined; | |
| |
| |
|
| |
| |
MVA is the market value of the asset in relation to which the disposal or | |
surrender occurred, on the assumption that the valuation is made | |
immediately before the disposal or surrender. | |
(7) An individual may not claim that a deduction is applicable in relation to a | |
lump sum more than once. | 5 |
(8) For the purposes of this section it must be assumed that, unless the contrary is | |
shown— | |
(a) the income and gains accruing to the scheme are not brought into | |
charge to tax, and | |
(b) no deduction is applicable under subsection (3) or (4). | 10 |
(9) For the purposes of this section income and gains accruing to the scheme are | |
not to be regarded as brought into charge to tax merely because tax is charged | |
in relation to the scheme in accordance with section 591C of ICTA. | |
(10) In this section “market value” is to be construed in accordance with sections | |
272 and 273 of TCGA 1992. | 15 |
Valuation of benefits etc. | |
398 Valuation of benefits | |
(1) In the case of a cash benefit, for the purposes of this Chapter the amount of a | |
benefit is taken to be the amount received. | |
(2) In the case of a non-cash benefit, for the purposes of this Chapter the amount | 20 |
of a benefit is taken to be the greater of— | |
(a) the amount of earnings (as defined in Chapter 1 of Part 3) that the | |
benefit would give rise to if it were received for performance of the | |
duties of an employment (money’s worth), and | |
(b) the cash equivalent of the benefit under the benefits code if it were so | 25 |
received and the code applied to it. | |
(3) For the purposes of subsection (2) the benefits code has effect with the | |
modifications in subsections (4) to (6). | |
(4) References in the benefits code to the employee are to be taken as references to | |
the person by whom the benefit is received. | 30 |
(5) References in the benefits code to the employer are to be taken as including | |
references to the former employer. | |
(6) Where— | |
(a) section 106 (cash equivalent of accommodation over £75,000) applies, | |
and | 35 |
(b) the amount referred to in section 105(2)(b) (the amount made good) | |
exceeds the amount referred to in section 105(2)(a) (the rental value), | |
the amount to be subtracted under paragraph (b) of step 4 of the calculation in | |
section 106(2) is that excess (and not only the excess rent referred to there). | |
399 Employment-related loans: interest treated as paid | 40 |
(1) This section applies if— | |
| |
| |
|
| |
| |
(a) an amount consisting of, or including, an amount representing the | |
benefit of a loan (“taxable amount”) counts as employment income of | |
an individual in a tax year under section 394(1), or | |
(b) the administrator of a scheme is charged to tax on a taxable amount | |
under Case VI of Schedule D under section 394(2). | 5 |
(2) The individual or the administrator is to be treated for all purposes of the Tax | |
Acts (other than this Chapter) as having paid interest on the loan in the tax year | |
equal to the amount representing the cash equivalent of the loan. | |
(3) The interest is to be treated— | |
(a) as accruing during the period in the tax year during which the loan is | 10 |
outstanding, and | |
(b) as paid at the end of the period. | |
(4) The interest is not to be treated— | |
(a) as income of the person making the loan, or | |
(b) as relevant loan interest to which section 369 of ICTA applies (mortgage | 15 |
interest payable under deduction of tax). | |
Interpretation | |
400 Interpretation | |
(1) In this Chapter— | |
“administrator”, in relation to a scheme, has the same meaning as in | 20 |
section 611AA of ICTA; | |
“employee” has the same meaning as in Chapter 1 of Part 14 of ICTA (see | |
section 612(1) of ICTA); | |
“ex-spouse” means a party to a marriage that has been dissolved or | |
annulled and, in relation to any person, means the other party to a | 25 |
marriage with that person that has been dissolved or annulled; | |
“non-approved retirement benefits scheme” has the same meaning as in | |
Chapter 1 (see section 387); | |
“relative”, in relation to an individual, means— | |
(a) the wife or husband of the individual, | 30 |
(b) the widow or widower of the individual, | |
(c) a child of the individual, and | |
(d) a dependant of the individual; | |
“relevant benefits” has the same meaning as in section 612(1) of ICTA. | |
(2) Section 612(2) of ICTA applies to the references in this Chapter to the provision | 35 |
of relevant benefits as it applies to such references in Chapter 1 of Part 14 of | |
ICTA. | |
| |
| |
|
| |
| |
Chapter 3 | |
Payments and benefits on termination of employment etc. | |
Preliminary | |
401 Application of this Chapter | |
(1) This Chapter applies to payments and other benefits which are received | 5 |
directly or indirectly in consideration or in consequence of, or otherwise in | |
connection with— | |
(a) the termination of a person’s employment, | |
(b) a change in the duties of a person’s employment, or | |
(c) a change in the earnings from a person’s employment, | 10 |
by the person, or the person’s spouse, blood relative, dependant or personal | |
representatives. | |
(2) Subsection (1) is subject to subsection (3) and sections 405 to 413 (exceptions for | |
certain payments and benefits). | |
(3) This Chapter does not apply to any payment or other benefit chargeable to | 15 |
income tax apart from this Chapter. | |
(4) For the purposes of this Chapter— | |
(a) a payment or other benefit which is provided on behalf of, or to the | |
order of, the employee or former employee is treated as received by the | |
employee or former employee, and | 20 |
(b) in relation to a payment or other benefit— | |
(i) any reference to the employee or former employee is to the | |
person mentioned in subsection (1), and | |
(ii) any reference to the employer or former employer is to be read | |
accordingly. | 25 |
402 Meaning of “benefit” | |
(1) In this Chapter “benefit” includes anything in respect of which, were it | |
received for performance of the duties of the employment, an amount— | |
(a) would be taxable earnings from the employment, or | |
(b) would be such earnings apart from an earnings-only exemption. | 30 |
This is subject to subsections (2) to (4). | |
(2) In this Chapter “benefit” does not include a benefit received in connection with | |
the termination of a person’s employment that is a benefit which, were it | |
received for performance of the duties of the employment, would fall within— | |
(a) section 239(4) (exemption of benefits connected with taxable cars and | 35 |
vans and exempt heavy goods vehicles), so far as that section applies to | |
a benefit connected with a car or van, | |
(b) section 269 (exemption where benefits or money obtained in connection | |
with taxable car or van or exempt heavy goods vehicle), | |
(c) section 319 (mobile telephones), or | 40 |
(d) section 320 (limited exemption for computer equipment). | |
| |
| |
|
