House of Commons Session 2002 - 03 Internet Publications Other Bills before Parliament

 Income Tax (Earnings and Pensions) Bill

 Income Tax (Earnings and Pensions) BillPart 3 — Employment income: earnings and benefits etc. treated as earningsChapter 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

(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) BillPart 3 — Employment income: earnings and benefits etc. treated as earningsChapter 6 — Taxable benefits: cars, vans and related benefits 77

Step 3

Calculate the provisional sum which is given by the formula—

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) BillPart 3 — Employment income: earnings and benefits etc. treated as earningsChapter 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) BillPart 3 — Employment income: earnings and benefits etc. treated as earningsChapter 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.