Income Tax (Earnings and Pensions) Bill

House of Commons

Session 2002 - 03
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Other Bills before Parliament

Income Tax (Earnings and Pensions) Bill

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    69

Cars: reduction where shared car
148   Reduction of cash equivalent where car is shared
     (1)    This section applies if in a tax year a car—
           (a)           is available to more than one employee concurrently,
           (b)           is so made available by the same employer, and
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           (c)           is available concurrently for each employee’s private use,
            and two or more of those employees are chargeable to tax in respect of the car
in that year by virtue of section 120.
     (2)    The cash equivalent of the benefit of the car to each of those employees for that
year—
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           (a)           is to be calculated separately under section 121, and
           (b)           is then to be reduced on a just and reasonable basis.
     (3)    If the employment of any of the employees mentioned in subsection (1)(a) is an
excluded employment, the availability of the car to that employee is to be
disregarded for the purposes of subsection (2)(b).
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     (4)    In this section the reference to the car being available for each employee’s
private use includes a reference to the car being available for the private use of
a member of the employee’s family or household.
Car fuel: benefit treated as earnings
149   Benefit of car fuel treated as earnings
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     (1)    If in a tax year—
           (a)           fuel is provided for a car by reason of an employee’s employment, and
           (b)           that person is chargeable to tax in respect of the car by virtue of section
120,
            the cash equivalent of the benefit of the fuel is to be treated as earnings from
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the employment for that year.
     (2)    The cash equivalent of the benefit of the fuel is calculated in accordance with
sections 150 to 153.
     (3)    Fuel is to be treated as provided for a car, in addition to any other way in which
it may be provided, if—
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           (a)           any liability in respect of the provision of fuel for the car is discharged,
           (b)           a non-cash voucher or a credit-token is used to obtain fuel for the car,
           (c)           a non-cash voucher or a credit-token is used to obtain money which is
spent on fuel for the car, or
           (d)           any sum is paid in respect of expenses incurred in providing fuel for the
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car.
     (4)    References in this section to fuel do not include any facility or means for
supplying electrical energy for an electrically propelled vehicle.
150   Car fuel: calculating the cash equivalent
     (1)    The cash equivalent of the benefit of the fuel is the appropriate percentage of
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£14,400.

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    70

     (2)    The “appropriate percentage” means the appropriate percentage determined
in accordance with sections 133 to 142 for the purpose of calculating the cash
equivalent of the benefit of the car for which the fuel is provided.
     (3)    But the cash equivalent may be—
           (a)           nil where either of the conditions in section 151 is met;
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           (b)           proportionately reduced under section 152;
           (c)           reduced under section 153.
151   Car fuel: nil cash equivalent
     (1)    The cash equivalent of the benefit of the fuel is nil if condition A or B is met.
     (2)    Condition A is met if in the tax year in question—
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           (a)           the employee is required to make good to the person providing the fuel
the whole of the expense incurred by that person in connection with the
provision of the fuel for the employee’s private use, and
           (b)           the employee does make good that expense.
     (3)    Condition B is met if in the tax year in question the fuel is made available only
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for business travel (see section 171(1)).
152   Car fuel: proportionate reduction of cash equivalent
     (1)    The cash equivalent of the benefit of the fuel is to be proportionately reduced
if for any part of the tax year in question the car for which the fuel is provided
is unavailable (within the meaning of section 143 (deduction for periods when
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car unavailable)).
     (2)    The cash equivalent of the benefit of the fuel is also to be proportionately
reduced if for any part of the tax year in question—
           (a)           the facility for the provision of fuel as mentioned in section 149(1) is not
available,
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           (b)           the fuel is made available only for business travel (see section 171(1)), or
           (c)           the employee is required to make good to the person providing the fuel
the whole of the expense incurred by that person in connection with the
provision of the fuel for the employee’s private use and the employee
does make good that expense.
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     (3)    The fact that any of the conditions specified in subsection (2) is met for part of
a tax year is to be disregarded if there is a time later in that year when none of
those conditions is met.
     (4)    Where the cash equivalent is to be proportionately reduced under subsection
(1) or (2) (or under both those subsections), the reduced amount is given by the
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formula—
            where—
                    CE is the amount of the cash equivalent before any reduction,
                    Y is the number of days in the tax year in question, and

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    71

                    D is the total number of days in that year on which either the car is
unavailable or one or more of the conditions in subsection (2) is met.
153   Car fuel: reduction of cash equivalent
If a reduction of the cash equivalent of the benefit of the car for which the fuel
is provided is made under section 148 (reduction of cash equivalent where car
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is shared), a corresponding reduction is to be made in relation to the cash
equivalent of the benefit of the fuel.
Vans: benefit treated as earnings
154   Benefit of van treated as earnings
If this Chapter applies to a van in relation to a particular tax year, the cash
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equivalent of the benefit of the van is to be treated as earnings from the
employment for that year.
155    Method of calculating the cash equivalent of the benefit of a van
     (1)    The method of calculation of the cash equivalent of the benefit of a van for a tax
year depends upon whether the van is a shared van for the whole or any part
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of that year.
     (2)    If the van is not a shared van for the whole or any part of the year, the cash
equivalent of the benefit of the van for the year is the value of exclusive
availability calculated in accordance with section 157.
     (3)    If the van is a shared van for the whole of the year, the cash equivalent of the
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benefit of the van for the year is the value of shared availability calculated in
accordance with section 160.
            This is subject to subsection (7) where more than one shared van is available to
an employee.
     (4)    If the van is a shared van for only part of the year the cash equivalent of the
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benefit of the van for the year is the total of—
           (a)           the value of exclusive availability calculated in accordance with section
157 (for the period when it is not a shared van), and
           (b)           the value of shared availability calculated in accordance with section
160 (for the period when it is a shared van).
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            This is subject to subsection (7) where more than one shared van is available to
an employee.
     (5)    The value of shared availability calculated in accordance with section 160
under section 161 (normal calculation) takes account of-
           (a)           the shared van, and
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           (b)           where that van is made available by the employer, any other vans made
available by the employer (whether or not to the employee or a member
of the employee’s family or household) which are shared vans for the
whole or any part of the tax year in question.
     (6)    The value of shared availability calculated in accordance with section 160
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under section 164 (alternative calculation) takes account of-
           (a)           the shared van, and

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    72

           (b)           where that van is made available by the employer, any other vans made
available by the employer to the employee or a member of the
employee’s family or household which are shared vans for the whole
or any part of the tax year in question.
     (7)    Accordingly, if more than one shared van, which is made available by the same
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employer, is available to an employee in a tax year the total of the cash
equivalents in respect of those vans is calculated by—
           (a)           taking the value of shared availability calculated once in accordance
with section 160, and
           (b)           if any of those vans is a shared van for only part of the year, adding the
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value of exclusive availability in respect of each of those vans calculated
in accordance with section 157.
     (8)    This section is subject to section 166 (limit of cash equivalent).
156   Meaning of “shared van”
     (1)    For the purposes of sections 155 to 165 a van is a shared van for a period if
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condition A or B is met.
     (2)    Condition A is met if throughout the period the van is available concurrently
to more than one employee of the same employer.
     (3)    Condition B is met if—
           (a)           the period is one throughout which the van is available to different
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employees of the same employer (a “shared period”), and
           (b)           the circumstances are such that the employee or employees to whom
the van is available at any given time in the period are not necessarily
the same as those to whom it is available at any other given time in the
period.
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     (4)    But if the van is available to only one employee for a period exceeding 30 days
(an “exclusive period”)—
           (a)           the exclusive period shall not count towards any period that would
otherwise be a shared period,
           (b)           the shared period is to be treated as ending when the exclusive period
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begins, and
           (c)           a further shared period may begin after the end of the exclusive period.
     (5)    If a van is a shared van for part of a day, it is to be treated for the purposes of
this section as shared throughout that day.
Vans: value of exclusive availability
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157   Value of exclusive availability
The value of exclusive availability is calculated as follows—
Step 1
            Determine the age of the van.
Step 2
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            If the age of the van is less than 4 years at the end of the tax year in question,
the basic value of the van for the year is £500.

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    73

            In any other case, the basic value of the van for the year is £350.
Step 3
            Make any deduction from the basic value of the van under section 158 for any
periods when the van was unavailable or a shared van.
            The resulting amount is the provisional sum.
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Step 4
            Make any deduction from the provisional sum under section 159 in respect of
payments by the employee for the private use of the van.

            The result is the value of exclusive availability.
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158   Deduction for periods of unavailability or shared use
     (1)    A deduction is to be made from the basic value of the van calculated under step
2 of section 157 if there are any excluded days during the tax year in question.
     (2)    In this section an “excluded day” means a day on which—
           (a)           the van is unavailable (see subsection (4)), or
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           (b)           the van is a shared van.
     (3)    The amount of the deduction is given by the formula—

            where—
                    E is the number of excluded days in the year,
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                    Y is the number of days in the year, and
                    B is the basic value of the van calculated under step 2 of section 157.
     (4)    For the purposes of this section a van is unavailable on any day if the day—
           (a)           falls before the first day on which the van is available to the employee,
           (b)           falls after the last day on which the van is available to the employee, or
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           (c)           falls within a period of 30 days or more throughout which the van is not
available to the employee.
159   Deduction for payments for private use
     (1)    A deduction is to be made from the provisional sum calculated under step 3 of
section 157 if, as a condition of the van being available for the employee’s
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private use, the employee—
           (a)           is required in the tax year in question to pay (whether by way of
deduction from earnings or otherwise) an amount of money for that
use, and
           (b)           makes such payment.
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     (2)    If the amount paid by the employee in respect of that year is equal to or exceeds
the provisional sum, the provisional sum is reduced so that the value of
exclusive availability is nil.

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    74

     (3)    In any other case the amount paid by the employee in respect of the year is
deducted from the provisional sum in order to give the value of exclusive
availability.
     (4)    If the van is a shared van for any part of the tax year in question, the reference
in subsection (1) to the employee’s private use in that year is to be read as a
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reference to the employee’s private use in that part of the year when the van is
not a shared van.
     (5)    In this section any reference to the van being available for the employee’s
private use includes a reference to the van being available for the private use
of a member of the employee’s family or household.
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Vans: value of shared availability
160   Value of shared availability
The value of shared availability is calculated under—
           (a)           section 161, or
           (b)           section 164 where the employee makes a claim for that section to apply.
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161   Value of shared availability: normal calculation
     (1)    The value of shared availability is calculated as follows—
Step 1
            Identify the van or vans involved in the calculation. They are—
           (a)           the shared van, and
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           (b)           where that van is made available by the employer, any other vans made
available (whether or not to the employee or a member of the
employee’s family or household) by the same employer which are
shared vans for the whole or any part of the tax year in question.
Step 2
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            Determine whether the employee is a participating employee within the
meaning of section 162.
            If the employee is not, then the value of shared availability is nil.
Step 3
            Determine the total number of participating employees within the meaning of
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section 162.
Step 4
            Find the basic value of the van for the year under section 163 or, where more
than one van is involved, the basic value of each of those vans for the year
under that section.
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Step 5
            Calculate the reckonable amount which is given by the formula—
            where—

Income Tax (Earnings and Pensions) Bill
Part 3 — Employment income: earnings and benefits etc. treated as earnings
Chapter 6 — Taxable benefits: cars, vans and related benefits
    75

                         BV is the basic value of the van or, where more than one van is
involved, the total of the basic values of each of those vans, and
                         PE is the total number of participating employees.
Step 6
            If the reckonable amount exceeds £500, the provisional sum is £500.
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            In any other case, the provisional sum is the reckonable amount.
Step 7
            Make any deduction from the provisional sum under section 165 in respect of
payments by the employee for the private use of the van or vans involved.

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            The result is the value of shared availability.
     (2)    The calculation is made under this section in relation to a participating
employee regardless of—
           (a)           the number of vans involved which are available to the particular
employee,
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           (b)           the fact that a particular van involved is or is not available to, or used
by, the employee, or
           (c)           the extent to which a particular van involved is available to, or used by,
the employee.
162   Shared van: meaning of “participating employee”
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     (1)    If only one van is involved, an employee is a participating employee for the
purposes of section 161 if—
           (a)           the van is available to the employee for the employee’s private use
while it is a shared van, and
           (b)           the employee makes private use of it at least once while it is a shared
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van.
     (2)    If more than one van is involved, an employee is a participating employee for
the purposes of section 161 if—
           (a)           one of the vans is available to the employee for the employee’s private
use while it is a shared van, or
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           (b)           some or all of the vans are available to the employee for the employee’s
private use while they are shared vans,
            and the employee makes private use of at least one of the vans involved while
it is shared van.
     (3)    In this section—
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           (a)           any reference to a van being available for an employee’s private use
includes a reference to the van being available for the private use of a
member of the employee’s family or household, and
           (b)           any reference to an employee making private use of a van includes a
reference to a member of the employee’s family or household making
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private use of it.
163   Shared van: basic value
     (1)    The basic value of a shared van is calculated as follows—



© Parliamentary copyright 2002	Revised 4 December 2002