Income Tax (Earnings and Pensions) Bill

House of Commons

Session 2002 - 03
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Income Tax (Earnings and Pensions) Bill

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 3 — Taxable benefits: expenses payments
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69    Extended meaning of “control”
     (1)    The definition of “control” in section 840 of ICTA (which is applied for the
purposes of this Act by section 719) is extended as follows.
     (2)    For the purposes of the benefits code that definition applies (with the necessary
modifications) in relation to an unincorporated association as it applies in
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relation to a body corporate.
Chapter 3
Taxable benefits: expenses payments
70    Sums in respect of expenses
     (1)    This Chapter applies to a sum paid to an employee in a tax year if the sum—
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           (a)           is paid to the employee in respect of expenses, and
           (b)           is so paid by reason of the employment.
     (2)    This Chapter applies to a sum paid away by an employee in a tax year if the
sum—
           (a)           was put at the employee’s disposal in respect of expenses,
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           (b)           was so put by reason of the employment, and
           (c)           is paid away by the employee in respect of expenses.
     (3)    For the purposes of this Chapter it does not matter whether the employment is
held at the time when the sum is paid or paid away so long as it is held at some
point in the tax year in which the sum is paid or paid away.
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     (4)    References in this Chapter to an employee accordingly include a prospective or
former employee.
     (5)    This Chapter does not apply to the extent that the sum constitutes earnings
from the employment by virtue of any other provision.
71    Meaning of paid or put at disposal by reason of the employment
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     (1)    If an employer pays a sum in respect of expenses to an employee it is to be
treated as paid by reason of the employment unless—
           (a)           the employer is an individual, and
           (b)           the payment is made in the normal course of the employer’s domestic,
family or personal relationships.
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     (2)    If an employer puts a sum at an employee’s disposal in respect of expenses it
is to be treated as put at the employee’s disposal by reason of the employment
unless—
           (a)           the employer is an individual, and
           (b)           the sum is put at the employee’s disposal in the normal course of the
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employer’s domestic, family or personal relationships.
72    Sums in respect of expenses treated as earnings
     (1)    If this Chapter applies to a sum, the sum is to be treated as earnings from the
employment for the tax year in which it is paid or paid away.

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 4 — Taxable benefits: vouchers and credit-tokens
    39

     (2)    Subsection (1) does not prevent the making of a deduction allowed under any
of the provisions listed in subsection (3).
     (3)    The provisions are—
                    section 336 (deductions for expenses: the general rule);
                    section 337 (travel in performance of duties);
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                    section 338 (travel for necessary attendance);
                    section 340 (travel between group employments);
                    section 341 (travel at start or finish of overseas employment);
                    section 342 (travel between employments where duties performed
abroad);
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                    section 343 (deduction for professional membership fees);
                    section 344 (deduction for annual subscriptions);
                    section 346 (deduction for employee liabilities);
                    section 351 (expenses of ministers of religion);
                    section 353 (deductions from earnings charged on remittance).
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Chapter 4
Taxable benefits: vouchers and credit-tokens
Cash vouchers: introduction
73    Cash vouchers to which this Chapter applies
     (1)    This Chapter applies to a cash voucher provided for an employee by reason of
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the employment which is received by the employee.
     (2)    A cash voucher provided for an employee by the employer is to be regarded as
provided by reason of the employment unless—
           (a)           the employer is an individual, and
           (b)           the provision is made in the normal course of the employer’s domestic,
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family or personal relationships.
     (3)    A cash voucher provided for an employee and appropriated to the employee—
           (a)           by attaching it to a card held for the employee, or
           (b)           in any other way,
            is to be treated for the purposes of this Chapter as having been received by the
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employee at the time when it is appropriated.
74    Provision for, or receipt by, member of employee’s family
For the purposes of this Chapter any reference to a cash voucher being
provided for or received by an employee includes a reference to it being
provided for or received by a member of the employee’s family.
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Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 4 — Taxable benefits: vouchers and credit-tokens
    40

Meaning of "cash voucher"
75    Meaning of “cash voucher”
     (1)    In this Chapter “cash voucher” means a voucher, stamp or similar document
capable of being exchanged for a sum of money which is—
           (a)           greater than,
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           (b)           equal to, or
           (c)           not substantially less than,
            the expense incurred by the person at whose cost the voucher, stamp or similar
document is provided.
     (2)    For the purposes of subsection (1) it does not matter whether the document—
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           (a)           is also capable of being exchanged for goods or services;
           (b)           is capable of being exchanged singly or together with other vouchers,
stamps, or documents;
           (c)           is capable of being exchanged immediately or only after a time.
     (3)    Subsection (1) is subject to section 76 (sickness benefits-related voucher).
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76    Sickness benefits-related voucher
     (1)    This section applies where—
           (a)           the expense incurred by the person at whose cost a voucher, stamp or
similar document is provided (“the provision expense”) includes costs
to that person of providing sickness benefits (“sickness benefits costs”),
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           (b)           the voucher, stamp or document would be a cash voucher (apart from
this section) but for the fact that the sum of money for which it is
capable of being exchanged (“the exchange sum”) is substantially less
than the provision expense, and
           (c)           the whole or part of the difference between the exchange sum and the
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provision expense represents the sickness benefits costs.
     (2)    The voucher, stamp or document is a cash voucher within the meaning of this
Chapter if—
            or

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            where—
                    E is the exchange sum,
                    PE is the provision expense, and
                    D is the amount of the difference between E and PE which represents the
sickness benefits costs.
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     (3)    In this section “sickness benefits” mean benefits in connection with sickness,
personal injury or death.
77    Apportionment of cost of provision of voucher
If a person incurs expense in or in connection with the provision of vouchers,
stamps or similar documents for two or more employees as members of a
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Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 4 — Taxable benefits: vouchers and credit-tokens
    41

group or class, the expense incurred in respect of one of them is to be such part
of that expense as is just and reasonable.
Cash vouchers: exceptions
78    Voucher made available to public generally
This Chapter does not apply to a cash voucher if—
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           (a)           it is of a kind made available to the public generally, and
           (b)           it is provided to the employee or a member of the employee’s family on
no more favourable terms than to the public generally.
79    Voucher issued under approved scheme
     (1)    This Chapter does not apply to a cash voucher received by an employee if—
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           (a)           it is issued under a scheme, and
           (b)           at the time when it is received the scheme is a scheme approved by the
Inland Revenue for the purposes of this section.
     (2)    The Inland Revenue must not approve a scheme for the purposes of this section
unless they are satisfied that it is practicable for income tax in respect of all
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payments made in exchange for vouchers issued under the scheme to be
deducted in accordance with PAYE regulations.
80    Vouchers where payment of sums exempt from tax
This Chapter does not apply to a cash voucher if it is—
           (a)           a document intended to enable a person to obtain payment of a sum
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which would not have constituted employment income if paid to the
person directly, or
           (b)           a savings certificate where the accumulated interest payable in respect
of it is exempt from tax (or would be so exempt if certain conditions
were met).
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Benefit of cash voucher treated as earnings
81    Benefit of cash voucher treated as earnings
     (1)    The cash equivalent of the benefit of a cash voucher to which this Chapter
applies is to be treated as earnings from the employment for the tax year in
which the voucher is received by the employee.
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     (2)    The cash equivalent is the sum of money for which the voucher is capable of
being exchanged.
Non-cash vouchers: introduction
82    Non-cash vouchers to which this Chapter applies
     (1)    This Chapter applies to a non-cash voucher provided for an employee by
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reason of the employment which is received by the employee.

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 4 — Taxable benefits: vouchers and credit-tokens
    42

     (2)    A non-cash voucher provided for an employee by the employer is to be
regarded as provided by reason of the employment unless—
           (a)           the employer is an individual, and
           (b)           the provision is made in the normal course of the employer’s domestic,
family or personal relationships.
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     (3)    A non-cash voucher provided for an employee and appropriated to the
employee—
           (a)           by attaching it to a card held for the employee, or
           (b)           in any other way,
            is to be treated for the purposes of this Chapter as having been received by the
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employee at the time when it is appropriated.
83    Provision for, or receipt by, member of employee’s family
For the purposes of this Chapter any reference to a non-cash voucher being
provided for or received by an employee includes a reference to it being
provided for or received by a member of the employee’s family.
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Meaning of "non-cash voucher"
84    Meaning of “non-cash voucher”
     (1)    In this Chapter “non-cash voucher” means—
           (a)           a voucher, stamp or similar document or token which is capable of
being exchanged for money, goods or services,
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           (b)           a transport voucher, or
           (c)           a cheque voucher,
            but does not include a cash voucher.
     (2)    For the purposes of subsection (1)(a) it does not matter whether the document
or token is capable of being exchanged—
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           (a)           singly or together with other vouchers, stamps, documents or tokens;
           (b)           immediately or only after a time.
     (3)    In this Chapter “transport voucher” means a ticket, pass or other document or
token intended to enable a person to obtain passenger transport services
(whether or not in exchange for it).
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     (4)    In this Chapter “cheque voucher” means a cheque—
           (a)           provided for an employee, and
           (b)           intended for use by the employee wholly or mainly for payment for—
                  (i)                 particular goods or services, or
                  (ii)                goods or services of one or more particular classes;
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            and, in relation to a cheque voucher, references to a voucher being exchanged
for goods or services are to be read accordingly.
Non-cash voucher: exceptions
85    Non-cash voucher made available to public generally
This Chapter does not apply to a non-cash voucher if—
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Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 4 — Taxable benefits: vouchers and credit-tokens
    43

           (a)           it is of a kind made available to the public generally, and
           (b)           it is provided to the employee or a member of the employee’s family on
no more favourable terms than to the public generally.
86    Transport vouchers under pre-26th March 1982 arrangements
     (1)    This Chapter does not apply to a transport voucher provided for an employee
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of a passenger transport undertaking under arrangements in operation on 25th
March 1982 which meet the condition in subsection (2).
     (2)    The condition is that the arrangements are intended to enable the employee or
a member of the employee’s family to obtain passenger transport services
provided by—
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           (a)           the employer,
           (b)           a subsidiary of the employer,
           (c)           a body corporate of which the employer is a subsidiary, or
           (d)           another passenger transport undertaking.
     (3)    In this section—
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                    “passenger transport undertaking” means an undertaking whose
business consists wholly or mainly in the carriage of passengers or a
subsidiary of such an undertaking, and
                    “subsidiary” means a wholly-owned subsidiary within the meaning of
section 736 of the Companies Act 1985 (c. 6).
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Benefit of non-cash voucher treated as earnings
87    Benefit of non-cash voucher treated as earnings
     (1)    The cash equivalent of the benefit of a non-cash voucher to which this Chapter
applies is to be treated as earnings from the employment for the tax year in
which the voucher is received by the employee.
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     (2)    The cash equivalent is the difference between—
           (a)           the cost of provision, and
           (b)           any part of that cost made good by the employee to the person
incurring it.
     (3)    In this Chapter the “cost of provision” means, in relation to a non-cash voucher,
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the expense incurred in or in connection with the provision of—
           (a)           the voucher, and
           (b)           the money, goods or services for which it is capable of being exchanged,
            by the person at whose cost they are provided.
     (4)    In the case of a transport voucher, the reference in subsection (3)(b) to the
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services for which the voucher is capable of being exchanged is to the
passenger transport services which may be obtained by using it.
     (5)    If a person incurs expense in or in connection with the provision of non-cash
vouchers for two or more employees as members of a group or class, the
expense incurred in respect of one of them is to be such part of that expense as
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is just and reasonable.
     (6)    This section is subject to section 89 (reduction for meal vouchers).



© Parliamentary copyright 2002	Revised 4 December 2002