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(b) any associate of the individual, with or without other such associates, | |
has at any time on or after 14th March 1989 been the beneficial owner of, or able | |
(directly or through the medium of other companies or by any other indirect | |
means) to control more than 5% of the ordinary share capital of the company. | |
(4) In subsection (3) “associate” does not include the trustees of an employee | 5 |
benefit trust as a result only of the individual’s having an interest in shares or | |
obligations of the trust. | |
(5) Sections 549 to 554 (attribution of interests in companies to beneficiaries of | |
employee benefit trusts) apply for the purposes of subsection (3) as they apply | |
for the purposes of the provisions listed in section 549(2). | 10 |
(6) In this section “employee benefit trust” has the meaning given by sections 550 | |
and 551. | |
61 Interpretation | |
(1) In this Chapter— | |
“associate” has the meaning given by section 60; | 15 |
“associated company” has the meaning given by section 416 of ICTA; | |
“business” means any trade, profession or vocation and includes a | |
Schedule A business; | |
“company” means a body corporate or unincorporated association, and | |
does not include a partnership; | 20 |
“employer’s national insurance contributions” means secondary Class 1 | |
or Class 1A national insurance contributions; | |
“engagement to which this Chapter applies” has the meaning given by | |
section 49(5); | |
“national insurance contributions” means contributions under Part 1 of | 25 |
SSCBA 1992 or Part 1 of SSCB(NI)A 1992; | |
“PAYE provisions” means the provisions of Part 11 or PAYE regulations; | |
“the relevant engagements” has the meaning given by section 50(4). | |
(2) References in this Chapter to payments or benefits received or receivable from | |
a partnership or unincorporated association include payments or benefits to | 30 |
which a person is or may be entitled in the person’s capacity as a member of | |
the partnership or association. | |
(3) For the purposes of this Chapter— | |
(a) anything done by or in relation to an associate of an intermediary is | |
treated as done by or in relation to the intermediary, and | 35 |
(b) a payment or other benefit provided to a member of an individual’s | |
family or household is treated as provided to the individual. | |
(4) For the purposes of this Chapter a man and a woman living together as | |
husband and wife are treated as if they were married to each other. | |
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Part 3 | |
Employment income: earnings and benefits etc. treated as earnings | |
Chapter 1 | |
Earnings | |
62 Earnings | 5 |
(1) This section explains what is meant by “earnings” in the employment income | |
Parts. | |
(2) In those Parts “earnings”, in relation to an employment, means— | |
(a) any salary, wages or fee, | |
(b) any gratuity or other profit or incidental benefit of any kind obtained | 10 |
by the employee if it is money or money’s worth, or | |
(c) anything else that constitutes an emolument of the employment. | |
(3) For the purposes of subsection (2) “money’s worth” means something that is— | |
(a) of direct monetary value to the employee, or | |
(b) capable of being converted into money or something of direct monetary | 15 |
value to the employee. | |
(4) Subsection (1) does not affect the operation of statutory provisions that provide | |
for amounts to be treated as earnings (and see section 721(7)). | |
Chapter 2 | |
Taxable benefits: the benefits code | 20 |
The benefits code | |
63 The benefits code | |
(1) In the employment income Parts “the benefits code” means— | |
this Chapter, | |
Chapter 3 (expenses payments), | 25 |
Chapter 4 (vouchers and credit-tokens), | |
Chapter 5 (living accommodation), | |
Chapter 6 (cars, vans and related benefits), | |
Chapter 7 (loans), | |
Chapter 8 (notional loans in respect of acquisitions of shares), | 30 |
Chapter 9 (disposals of shares for more than market value), | |
Chapter 10 (residual liability to charge), and | |
Chapter 11 (exclusion of lower-paid employments from parts of benefits | |
code). | |
(2) If an employment is an excluded employment, the general effect of section | 35 |
216(1) (provisions not applicable to lower-paid employments) is that only the | |
following Chapters apply to the employment— | |
this Chapter, | |
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Chapter 4 (vouchers and credit-tokens), | |
Chapter 5 (living accommodation), and | |
Chapter 11 (exclusion of lower-paid employments from parts of benefits | |
code). | |
(3) Section 216(5) and (6) explain and restrict the effect of section 216(1). | 5 |
(4) In the benefits code “excluded employment” means an employment to which | |
the exclusion in section 216(1) applies. | |
64 Relationship between earnings and benefits code | |
(1) This section applies if, apart from this section, the same benefit would give rise | |
to two amounts (“A” and “B”)— | 10 |
(a) A being an amount of earnings as defined in Chapter 1 of this Part, and | |
(b) B being an amount to be treated as earnings under the benefits code. | |
(2) In such a case— | |
(a) A constitutes earnings as defined in Chapter 1 of this Part, and | |
(b) the amount (if any) by which B exceeds A is to be treated as earnings | 15 |
under the benefits code. | |
(3) This section does not apply in connection with living accommodation to which | |
Chapter 5 of this Part applies. | |
(4) In that case section 109 applies to determine the relationship between that | |
Chapter and Chapter 1 of this Part. | 20 |
(5) This section does not apply if section 193 (notional loan where acquisition of | |
shares made for less than market value) applies. | |
(6) In that case sections 194 (amount of notional loan) and 196 (effects on other | |
income tax charges) apply to determine the relationship between Chapters 1 | |
and 8 of this Part. | 25 |
65 Dispensations relating to benefits within provisions not applicable to lower- | |
paid employment | |
(1) This section applies for the purposes of the listed provisions where a person | |
(“P”) supplies the Inland Revenue with a statement of the cases and | |
circumstances in which— | 30 |
(a) payments of a particular character are made to or for any employees, or | |
(b) benefits or facilities of a particular kind are provided for any | |
employees, | |
whether they are employees of P or some other person. | |
(2) The “listed provisions” are the provisions listed in section 216(4) (provisions of | 35 |
the benefits code which do not apply to lower-paid employments). | |
(3) If the Inland Revenue are satisfied that no additional tax is payable by virtue of | |
the listed provisions by reference to the payments, benefits or facilities | |
mentioned in the statement, they must give P a dispensation under this section. | |
(4) A “dispensation” is a notice stating that the Inland Revenue agree that no | 40 |
additional tax is payable by virtue of the listed provisions by reference to the | |
payments, benefits or facilities mentioned in the statement supplied by P. | |
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(5) If a dispensation is given under this section, nothing in the listed provisions | |
applies to the payments, or the provision of the benefits or facilities, covered | |
by the dispensation or otherwise has the effect of imposing any additional | |
liability to tax in respect of them. | |
(6) If in their opinion there is reason to do so, the Inland Revenue may revoke a | 5 |
dispensation by giving a further notice to P. | |
(7) That notice may revoke the dispensation from— | |
(a) the date when the dispensation was given, or | |
(b) a later date specified in the notice. | |
(8) If the notice revokes the dispensation from the date when the dispensation was | 10 |
given— | |
(a) any liability to tax that would have arisen if the dispensation had never | |
been given is to be treated as having arisen, and | |
(b) P and the employees in question must make all the returns which they | |
would have had to make if the dispensation had never been given. | 15 |
(9) If the notice revokes the dispensation from a later date— | |
(a) any liability to tax that would have arisen if the dispensation had | |
ceased to have effect on that date is to be treated as having arisen, and | |
(b) P and the employees in question must make all the returns which they | |
would have had to make if the dispensation had ceased to have effect | 20 |
on that date. | |
General definitions for benefits code | |
66 Meaning of “employment” and related expressions | |
(1) In the benefits code — | |
(a) “employment” means a taxable employment under Part 2, and | 25 |
(b) “employed”, “employee” and “employer” have corresponding | |
meanings. | |
(2) Where a Chapter of the benefits code applies in relation to an employee— | |
(a) references in that Chapter to “the employment” are to the employment | |
of that employee, and | 30 |
(b) references in that Chapter to “the employer” are to the employer in | |
respect of that employment. | |
(3) For the purposes of the benefits code an employment is a “taxable employment | |
under Part 2” in a tax year if the earnings from the employment for that year | |
are (or would be if there were any) general earnings to which the charging | 35 |
provisions of Chapter 4 or 5 of Part 2 apply. | |
(4) In subsection (3) “earnings” means earnings as defined in Chapter 1 of this | |
Part. | |
67 Meaning of “director” and “full-time working director” | |
(1) In the benefits code “director” means— | 40 |
(a) in relation to a company whose affairs are managed by a board of | |
directors or similar body, a member of that body, | |
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(b) in relation to a company whose affairs are managed by a single director | |
or similar person, that director or person, and | |
(c) in relation to a company whose affairs are managed by the members | |
themselves, a member of the company, | |
and includes any person in accordance with whose directions or instructions | 5 |
the directors of the company (as defined above) are accustomed to act. | |
(2) For the purposes of subsection (1) a person is not to be regarded as a person in | |
accordance with whose directions or instructions the directors of the company | |
are accustomed to act merely because the directors act on advice given by that | |
person in a professional capacity. | 10 |
(3) In the benefits code “full-time working director” means a director who is | |
required to devote substantially the whole of his time to the service of the | |
company in a managerial or technical capacity. | |
68 Meaning of “material interest” in a company | |
(1) For the purposes of the benefits code a person has a material interest in a | 15 |
company if condition A or B is met. | |
(2) Condition A is that the person (with or without one or more associates) or any | |
associate of that person (with or without one or more such associates) is— | |
(a) the beneficial owner of, or | |
(b) able to control, directly or through the medium of other companies or | 20 |
by any other indirect means, | |
more than 5% of the ordinary share capital of the company. | |
(3) Condition B is that, in the case of a close company, the person (with or without | |
one or more associates) or any associate of that person (with or without one or | |
more such associates), possesses or is entitled to acquire, such rights as | 25 |
would— | |
(a) in the event of the winding-up of the company, or | |
(b) in any other circumstances, | |
give an entitlement to receive more than 5% of the assets which would then be | |
available for distribution among the participators. | 30 |
(4) In this section— | |
“associate” has the meaning given by section 417(3) of ICTA except that, | |
for this purpose, “relative” in section 417(3) has the meaning given by | |
subsection (5) below, and | |
“participator” has the meaning given by section 417(1) of ICTA. | 35 |
(5) For the purposes of this section a person (“A”) is a relative of another (“B”) if A | |
is— | |
(a) B’s spouse, | |
(b) a parent, child or remoter relation in the direct line either of B or of B’s | |
spouse, | 40 |
(c) a brother or sister of B or of B’s spouse, or | |
(d) the spouse of a person falling within paragraph (b) or (c). | |
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