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House of Commons

Session 2002 - 03 Internet Publications Other Bills before Parliament

Income Tax (Earnings and Pensions) Bill

Income Tax (Earnings and Pensions) Bill
EXPLANATORY NOTES
Explanatory Notes to the Bill, prepared by the Tax Law Rewrite Project at the Inland
Revenue, are published separately as Bill 13—EN.
TABLES
A Table of Origins and a Table of Destinations for the Bill are available in a separate
volume. The Tables have no official status.
EUROPEAN CONVENTION ON HUMAN RIGHTS
Mr Chancellor of the Exchequer has made the following statement under section
19(1)(a) of the Human Rights Act 1998:
In my view the provisions of the Income Tax (Earnings and Pensions) Bill are
compatible with the Convention rights.
Bill 13 53/2
Income Tax (Earnings and Pensions) Bill
Contents
Part 1
Overview
1        Overview of contents of this Act
2        Abbreviations and defined expressions
Part 2
Employment income: charge to tax
Chapter 1
Introduction
3        Structure of employment income Parts
4        “Employment” for the purposes of the employment income Parts
5        Application to offices and office-holders
Chapter 2
Tax on employment income
6        Nature of charge to tax on employment income
7        Meaning of “employment income”, “general earnings” and “specific
employment income”
8        Meaning of “exempt income”
Chapter 3
Operation of tax charge
9        Amount of employment income charged to tax
10        Meaning of “taxable earnings” and “taxable specific income”
11        Calculation of “net taxable earnings”
12        Calculation of “net taxable specific income”
13        Person liable for tax
Bill 13 53/2
Income Tax (Earnings and Pensions) Bill iv
Chapter 4
Taxable earnings: rules applying to employee resident, ordinarily resident and
domiciled in UK
Taxable earnings
14        Taxable earnings under this Chapter: introduction
Employees resident, ordinarily resident and domiciled in UK
15        Earnings for year when employee resident, ordinarily resident and domiciled
in UK
Year for which general earnings are earned
16        Meaning of earnings “for” a tax year
17        Treatment of earnings for year in which employment not held
When general earnings are received
18        Receipt of money earnings
19        Receipt of non-money earnings
Chapter 5
Taxable earnings: rules applying to employee resident, ordinarily resident or
domiciled outside UK
Taxable earnings
20        Taxable earnings under this Chapter: introduction
Employees resident and ordinarily resident in UK
21        Earnings for year when employee resident and ordinarily resident, but not
domiciled, in UK, except chargeable overseas earnings
22        Chargeable overseas earnings for year when employee resident and
ordinarily resident, but not domiciled, in UK
23        Calculation of “chargeable overseas earnings”
24        Limit on chargeable overseas earnings where duties of associated
employment performed in UK
Employees resident but not ordinarily resident in UK
25        UK-based earnings for year when employee resident, but not ordinarily
resident, in UK
26        Foreign earnings for year when employee resident, but not ordinarily
resident, in UK
Employees not resident in UK
27        UK-based earnings for year when employee not resident in UK
Income Tax (Earnings and Pensions) Bill v
Special class of earnings for purposes of sections 25 to 27
28        Meaning of “general earnings from overseas Crown employment subject to
UK tax”
Year for which general earnings are earned
29        Meaning of earnings “for” a tax year
30        Treatment of earnings for year in which employment not held
When general earnings are received or remitted
31        Receipt of money earnings
32        Receipt of non-money earnings
33        Earnings remitted to the United Kingdom
34        Earnings remitted to the United Kingdom: further provisions about UK-
linked debts
Relief for delayed remittances
35        Relief for delayed remittances
36        Election in respect of delayed remittances
37        Claims for relief on delayed remittances
Place of performance of duties of employment
38        Earnings for period of absence from employment
39        Duties in UK merely incidental to duties outside UK
40        Duties on board vessel or aircraft
41        Employment in UK sector of continental shelf
Chapter 6
Disputes as to domicile or ordinary residence
42        Board to determine dispute as to domicile or ordinary residence
43        Appeal against Board’s decision on domicile or ordinary residence
Chapter 7
Application of provisions to agency workers
Agency workers
44        Treatment of workers supplied by agencies
45        Arrangements with agencies
46        Cases involving unincorporated bodies etc.
Supplementary
47        Interpretation of this Chapter
Income Tax (Earnings and Pensions) Bill vi
Chapter 8
Application of provisions to workers under arrangements made by
intermediaries
Application of this Chapter
48        Scope of this Chapter
49        Engagements to which this Chapter applies
50        Worker treated as receiving earnings from employment
51        Conditions of liability where intermediary is a company
52        Conditions of liability where intermediary is a partnership
53        Conditions of liability where intermediary is an individual
The deemed employment payment
54        Calculation of deemed employment payment
55        Application of rules relating to earnings from employment
56        Application of Income Tax Acts in relation to deemed employment
Supplementary provisions
57        Earlier date of deemed employment payment in certain cases
58        Relief in case of distributions by intermediary
59        Provisions applicable to multiple intermediaries
60        Meaning of “associate”
61        Interpretation
Part 3
Employment income: earnings and benefits etc. treated as earnings
Chapter 1
Earnings
62        Earnings
Chapter 2
Taxable benefits: the benefits code
The benefits code
63        The benefits code
64        Relationship between earnings and benefits code
65        Dispensations relating to benefits within provisions not applicable to lower-
paid employment
General definitions for benefits code
66        Meaning of “employment” and related expressions
67        Meaning of “director” and “full-time working director”
68        Meaning of “material interest” in a company
Income Tax (Earnings and Pensions) Bill vii
69        Extended meaning of “control”
Chapter 3
Taxable benefits: expenses payments
70        Sums in respect of expenses
71        Meaning of paid or put at disposal by reason of the employment
72        Sums in respect of expenses treated as earnings
Chapter 4
Taxable benefits: vouchers and credit-tokens
Cash vouchers: introduction
73        Cash vouchers to which this Chapter applies
74        Provision for, or receipt by, member of employee’s family
Meaning of "cash voucher"
75        Meaning of “cash voucher”
76        Sickness benefits-related voucher
77        Apportionment of cost of provision of voucher
Cash vouchers: exceptions
78        Voucher made available to public generally
79        Voucher issued under approved scheme
80        Vouchers where payment of sums exempt from tax
Benefit of cash voucher treated as earnings
81        Benefit of cash voucher treated as earnings
Non-cash vouchers: introduction
82        Non-cash vouchers to which this Chapter applies
83        Provision for, or receipt by, member of employee’s family
Meaning of "non-cash voucher"
84        Meaning of “non-cash voucher”
Non-cash voucher: exceptions
85        Non-cash voucher made available to public generally
86        Transport vouchers under pre-26th March 1982 arrangements
Benefit of non-cash voucher treated as earnings
87        Benefit of non-cash voucher treated as earnings
88        Year in which earnings treated as received
89        Reduction for meal vouchers
Income Tax (Earnings and Pensions) Bill viii
Credit-tokens: introduction
90        Credit-tokens to which this Chapter applies
91        Provision for, or use by, member of employee’s family
Meaning of "credit-token"
92        Meaning of “credit-token”
Credit-tokens: exception
93        Credit-token made available to public generally
Benefit of credit-token treated as earnings
94        Benefit of credit-token treated as earnings
General supplementary provisions
95        Disregard for money, goods or services obtained
96        Dispensations relating to vouchers or credit-tokens
Chapter 5
Taxable benefits: living accommodation
Living accommodation
97        Living accommodation to which this Chapter applies
Exceptions
98        Accommodation provided by local authority
99        Accommodation provided for performance of duties
100        Accommodation provided as result of security threat
101        Chevening House
Benefit of living accommodation treated as earnings
102        Benefit of living accommodation treated as earnings
Calculation of cash equivalent
103        Method of calculating cash equivalent
104        General rule for calculating cost of providing accommodation
Accommodation costing £75,000 or less
105        Cash equivalent: cost of accommodation not over £75,000
Accommodation costing more than £75,000
106        Cash equivalent: cost of accommodation over £75,000
107        Special rule for calculating cost of providing accommodation

© Parliamentary copyright 2002	Revised 4 December 2002