Income Tax (Earnings and Pensions) Bill

House of Commons

Session 2002 - 03
Internet Publications
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
    76

Step 1
            Determine the age of the van.
Step 2
            If the age of the van is less than 4 years at the end of the tax year in question,
the interim value of the van is £500.
5
            In any other case, the interim value of the van is £350.
Step 3
            Make a deduction from the interim value if there are any excluded days during
the tax year in question.
            The amount of the deduction is given by the formula—
10


            where—
                    E is the number of excluded days in the year,
                    Y is the number of days in the year, and
15
                    IV is the interim value of the van.

            The result is the basic value of the van for the year.
     (2)    In this section an “excluded day” means a day on which—
           (a)           the van is not a shared van, or
20
           (b)           the van is incapable of use.
     (3)    For the purposes of this section a van is to be treated as incapable of use on any
day if the day falls within a period of 30 days or more throughout which the
van is incapable of being used at all.
164   Value of shared availability: alternative calculation
25
     (1)    This section applies if the employee makes a claim for this section to apply
instead of section 161.
     (2)    The value of shared availability is calculated as follows—
Step 1
            Identify the van or vans involved in the calculation. They are—
30
           (a)           the shared van, and
           (b)           where that van is made available by the employer, any other vans made
available by the same 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.
35
Step 2
            Determine the number of relevant days for the van, or where more than one
van is involved, for each of those vans.

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
    77

Step 3
            Calculate the provisional sum which is given by the formula— $equation: cross[times[char[R],char[D]],string["\xa3 5"]]$
            where RD is the number of relevant days for the van or, where more than one
van is involved, the total of the number of relevant days for each of those vans.
Step 4
5
            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.

            The result is the value of shared availability.
     (3)    For the purposes of this section a relevant day is a day—
10
           (a)           which falls in the tax year in question, and
           (b)           during which (or during part of which) the employee or a member of
the employee’s family or household makes private use of the van
concerned while it is a shared van.
     (4)    For the purposes of section 95 of TMA 1970 (incorrect return etc.) a claim under
15
this section is to be treated as a claim for relief.
165   Deduction for payments for private use
     (1)    A deduction is to be made from the provisional sum calculated under step 6 of
section 161(1) or step 3 of section 164(2) if, as a condition of the van or vans
involved being available for the employee’s private use, the employee—
20
           (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.
     (2)    If the relevant sum in respect of that year is equal to or exceeds the provisional
25
sum, the provisional sum is reduced so that the value of shared availability is
nil.
     (3)    In any other case the relevant sum in respect of the year is deducted from the
provisional sum in order to give the value of shared availability.
     (4)    The relevant sum is found by—
30
           (a)           taking for any van involved the amount paid by the employee as a
condition of it being available for the employee’s private use in respect
of the period when it is a shared van in the year concerned, and
           (b)           where more than one van is involved, adding together all the amounts
found under paragraph (a).
35
     (5)    In this section any reference to a 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.

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
    78

Vans: limit of cash equivalent
166   Vans: limit of cash equivalent
If—
           (a)           the cash equivalent of the benefit of vans to an employee for a year
would (apart from this section) total more than £500, and
5
           (b)           no more than one of the vans is available to the employee for the
employee’s private use, or the private use of a member of the
employee’s family or household, at any one time in the year,
            the cash equivalent of the benefit of the vans to the employee for the year is to
be £500.
10
Cars and vans: exceptions
167   Pooled cars
     (1)    This section applies to a car in relation to a particular tax year if for that year
the car has been included in a car pool for the use of the employees of one or
more employers.
15
     (2)    For that tax year the car—
           (a)           is to be treated under section 114(1) (cars to which this Chapter applies)
as not having been available for the private use of any of the employees
concerned, and
           (b)           is not to be treated in relation to the employees concerned as an
20
employment-related benefit within the meaning of Chapter 10 of this
Part (taxable benefits: residual liability to charge) (see section 201).
     (3)    In relation to a particular tax year, a car is included in a car pool for the use of
the employees of one or more employers if in that year—
           (a)           the car was made available to, and actually used by, more than one of
25
those employees,
           (b)           the car was made available, in the case of each of those employees, by
reason of the employee’s employment,
           (c)           the car was not ordinarily used by one of those employees to the
exclusion of the others,
30
           (d)           in the case of each of those employees, any private use of the car made
by the employee was merely incidental to the employee’s other use of
the car in that year, and
           (e)           the car was not normally kept overnight on or in the vicinity of any
residential premises where any of the employees was residing, except
35
while being kept overnight on premises occupied by the person making
the car available to them.
168   Pooled vans
     (1)    This section applies to a van in relation to a particular tax year if for that year
the van has been included in a van pool for the use of the employees of one or
40
more employers.
     (2)    For that tax year the van—

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
    79

           (a)           is to be treated under section 114(1) (vans to which this Chapter
applies) as not having been available for the private use of any of the
employees concerned, and
           (b)           is not to be treated in relation to the employees concerned as an
employment-related benefit within the meaning of Chapter 10 of this
5
Part (taxable benefits: residual liability to charge) (see section 201).
     (3)    In relation to a particular tax year, a van is included in a van pool for the use of
the employees of one or more employers if in that year—
           (a)           the van was made available to, and actually used by, more than one of
those employees,
10
           (b)           the van was made available, in the case of each of those employees, by
reason of the employee’s employment,
           (c)           the van was not ordinarily used by one of those employees to the
exclusion of the others,
           (d)           in the case of each of those employees, any private use of the van made
15
by the employee was merely incidental to the employee’s other use of
the van in that year, and
           (e)           the van was not normally kept overnight on or in the vicinity of any
residential premises where any of the employees was residing, except
while being kept overnight on premises occupied by the person making
20
the van available to them.
169   Car available to more than one member of family or household employed by
same employer
     (1)    This section applies where—
           (a)           an employee (“E”) and a member of the employee’s family or
25
household (“M”) are employed by the same employer, and
           (b)           as a result of a car being made available to M in a tax year, E would
(apart from this section) be 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 and of any fuel provided for the
30
car by reason of E’s employment is not to be treated as E’s earnings for that
year if—
           (a)           M is chargeable to tax in respect of the car in that year by virtue of
section 120, or
           (b)           where M’s employment is an excluded employment, M had the benefit
35
of the car in M’s own right as an employee and condition A or B is met.
     (3)    Condition A is met if equivalent cars are made available on the same terms to
employees who—
           (a)           are in similar employment to M with the same employer, and
           (b)           are not members of the family or household of employees of that
40
employer who are employed in employment which is not an excluded
employment.
     (4)    Condition B is met if the making available of an equivalent car is in accordance
with the normal commercial practice for an employment of the kind held by M.



© Parliamentary copyright 2002	Revised 4 December 2002