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(ii) one or more persons other than P (apart from the director) | |
account to the Board of Inland Revenue for some or all of the | |
deductible tax. | |
(2) For the purposes of this section it does not matter whether the director’s | |
employment is held at the time when P makes the payment mentioned in | 5 |
subsection (1)(a) so long as it is held at some point in the tax year in which the | |
payment is made. | |
(3) References in this section to employment as a director accordingly include | |
prospective or past employment as a director. | |
(4) The deductible tax accounted for to the Board of Inland Revenue is to be | 10 |
treated as earnings of the director from the director’s employment for the tax | |
year in which it is accounted for. | |
(5) But if— | |
(a) the deductible tax is accounted for after the director’s employment has | |
ceased, and | 15 |
(b) the employment ceased in a tax year before the one in which the | |
deductible tax is accounted for, | |
the deductible tax is treated as earnings for the tax year in which the director’s | |
employment ceased. | |
(6) The following rules apply to the calculation of the amount to be treated as | 20 |
earnings under this section— | |
(a) any amount accounted for after the death of the director is to be | |
disregarded; | |
(b) if P deducts some of the deductible tax, the amount treated as earnings | |
is reduced by the amount deducted; | 25 |
(c) if the director makes good to P or to another person some or all of the | |
deductible tax which P or the other person accounts for, the amount | |
treated as earnings is reduced by the amount made good. | |
(7) This section does not apply if the director has no material interest in the | |
company and either— | 30 |
(a) the director is employed as a full-time working director of the | |
company, or | |
(b) the company is— | |
(i) non-profit-making, or | |
(ii) established for charitable purposes only. | 35 |
(8) In this section— | |
“director” has the same meaning as in the benefits code (see section 67); | |
“director’s employment”, in relation to a person who is employed as a | |
director, means that employment; | |
“full-time working director” has the same meaning as in the benefits code | 40 |
(see section 67); | |
“material interest” has the same meaning as in the benefits code (see | |
section 68); | |
“non-profit-making”, in relation to a company, means that— | |
(a) the company does not carry on a trade, and | 45 |
(b) its functions do not consist wholly or mainly in the holding of | |
investments or other property. | |
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224 Payments to non-approved personal pension arrangements | |
(1) Contributions paid by an employer under non-approved personal pension | |
arrangements made by the employee are to be treated as earnings from the | |
employment for the tax year in which they are paid. | |
(2) Subsection (1) does not apply if or to the extent that the contributions are | 5 |
chargeable to income tax as the employee’s income apart from this section. | |
(3) For the purposes of this section— | |
(a) “personal pension arrangements” has the meaning given by section | |
630(1) of ICTA, and | |
(b) arrangements are “non-approved” if they are not “approved” within | 10 |
the meaning of that section. | |
225 Payments for restrictive undertakings | |
(1) This section applies where— | |
(a) an individual gives a restrictive undertaking in connection with the | |
individual’s current, future or past employment, and | 15 |
(b) a payment is made in respect of— | |
(i) the giving of the undertaking, or | |
(ii) the total or partial fulfilment of the undertaking. | |
(2) It does not matter to whom the payment is made. | |
(3) The payment is to be treated as earnings from the employment for the tax year | 20 |
in which it is made. | |
(4) Subsection (3) does not apply if the payment constitutes earnings from the | |
employment by virtue of any other provision. | |
(5) A payment made after the death of the individual who gave the undertaking | |
is treated for the purposes of this section as having been made immediately | 25 |
before the death. | |
(6) This section applies only where— | |
(a) the earnings from the employment are general earnings to which any | |
of the provisions mentioned in subsection (7) apply, or | |
(b) if there were general earnings from the employment they would be | 30 |
general earnings to which any of those provisions apply. | |
(7) The provisions are— | |
(a) section 15 (earnings of employee resident, ordinarily resident and | |
domiciled in the UK), | |
(b) section 21 (earnings of employee resident and ordinarily resident, but | 35 |
not domiciled, in UK, except chargeable overseas earnings), | |
(c) section 25 (UK-based earnings of employee resident but not ordinarily | |
resident in UK), and | |
(d) section 27 (UK-based earnings of employee not resident in UK). | |
(8) In this section “restrictive undertaking” means an undertaking which restricts | 40 |
the individual’s conduct or activities. | |
For this purpose it does not matter whether or not the undertaking is legally | |
enforceable or is qualified. | |
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226 Valuable consideration given for restrictive undertakings | |
(1) In a case where— | |
(a) an individual gives a restrictive undertaking in connection with the | |
individual’s current, future or past employment, and | |
(b) valuable consideration that is not in the form of money is provided in | 5 |
respect of— | |
(i) the giving of the undertaking, or | |
(ii) the total or partial fulfilment of the undertaking, | |
section 225 applies as it would if a payment of an amount equal to the value of | |
the consideration had been made instead. | 10 |
(2) For this purpose— | |
(a) merely assuming an obligation to make over or provide valuable | |
property, rights or advantages is not valuable consideration, but | |
(b) wholly or partially discharging such an obligation is. | |
Part 4 | 15 |
Employment income: exemptions | |
Chapter 1 | |
Exemptions: general | |
227 Scope of Part 4 | |
(1) This Part contains— | 20 |
(a) earnings-only exemptions, and | |
(b) employment income exemptions. | |
(2) In this Act “earnings-only exemption” means an exemption from income tax | |
which— | |
(a) prevents liability to tax arising in respect of earnings, either by virtue of | 25 |
one or more particular provisions (such as a Chapter of the benefits | |
code) or at all, and | |
(b) does not prevent liability to tax arising in respect of other employment | |
income. | |
(3) In this Act “employment income exemption” means an exemption from | 30 |
income tax which prevents liability to tax arising in respect of employment | |
income of any kind at all. | |
(4) The following provisions in Part 7 also confer exemption from liability to | |
income tax in respect of earnings— | |
(a) section 426 (conditional interests in shares: no charge in respect of | 35 |
acquisition of employee’s interest in certain circumstances), | |
(b) section 474 (share options: no charge in respect of receipt of shorter- | |
term option), | |
(c) sections 489 to 493 and sections 496 to 499 (approved share incentive | |
plans), | 40 |
(d) section 518 (approved SAYE option schemes: no charge in respect of | |
receipt of option), | |
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(e) section 519 (approved SAYE option schemes: no charge in respect of | |
exercise of option), | |
(f) section 523 (approved CSOP schemes: no charge in respect of receipt of | |
option), | |
(g) section 524 (approved CSOP schemes: no charge in respect of exercise | 5 |
of option), | |
(h) section 528 (enterprise management incentives: no charge on receipt of | |
qualifying option), | |
(i) section 542 (priority share allocations: exemption where offer made to | |
public and employees), and | 10 |
(j) section 544 (priority share allocations: exemption where different offers | |
made to public and employees). | |
228 Effect of exemptions on liability under provisions outside Part 2 | |
(1) The exemptions conferred by the provisions specified in subsection (2) prevent | |
liability to income tax arising under any enactment, but the other exemptions | 15 |
in this Part only affect liability to income tax under Part 2 of this Act. | |
(2) The provisions referred to in subsection (1) are— | |
(a) section 245 (travelling and subsistence during public transport strikes), | |
(b) section 248 (transport home: late night working and failure of car- | |
sharing arrangements), | 20 |
(c) section 264 (annual parties and functions), | |
(d) Chapter 8 of this Part (exemptions for special kinds of employees) | |
except for sections 290 and 291, | |
(e) section 323 (long service awards), | |
(f) section 324 (small gifts from third parties), and | 25 |
(g) section 326 (expenses incidental to transfer of a kind not normally met | |
by transferor). | |
Chapter 2 | |
Exemptions: mileage allowances and passenger payments | |
Mileage allowances | 30 |
229 Mileage allowance payments | |
(1) No liability to income tax arises in respect of approved mileage allowance | |
payments for a vehicle to which this Chapter applies (see section 235). | |
(2) Mileage allowance payments are amounts, other than passenger payments (see | |
section 233), paid to an employee for expenses related to the employee’s use of | 35 |
such a vehicle for business travel (see section 236(1)). | |
(3) Mileage allowance payments are approved if, or to the extent that, for a tax | |
year, the total amount of all such payments made to the employee for the kind | |
of vehicle in question does not exceed the approved amount for such payments | |
applicable to that kind of vehicle (see section 230). | 40 |
(4) Subsection (1) does not apply if— | |
(a) the employee is a passenger in the vehicle, or | |
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(b) the vehicle is a company vehicle (see section 236(2)). | |
230 The approved amount for mileage allowance payments | |
(1) The approved amount for mileage allowance payments that is applicable to a | |
kind of vehicle is—![equation: cross[char[M],char[R]]](missing.gif) | |
where— | 5 |
M is the number of miles of business travel by the employee (other than | |
as a passenger) using that kind of vehicle in the tax year in question; | |
R is the rate applicable to that kind of vehicle. | |
(2) The rates applicable are as follows— | |
| | Kind of vehicle | Rate per mile | | 10 | | | Car or van | 40p for the first 10,000 miles | | | | | | 25p after that | | | | | Motor cycle | 24p | | | | | Cycle | 20p | | |
|
(3) The reference in subsection (2) to “the first 10,000 miles” is to the total number | 15 |
of miles of business travel in relation to the employment, or any associated | |
employment, by car or van in the tax year in question. | |
(4) One employment is associated with another if— | |
(a) the employer is the same; | |
(b) the employers are partnerships or bodies and an individual or another | 20 |
partnership or body has control over both of them; or | |
(c) the employers are associated companies within the meaning of section | |
416 of ICTA. | |
(5) In subsection (4)(b)— | |
(a) “control”, in relation to a body corporate or partnership, has the | 25 |
meaning given by section 840 of ICTA (in accordance with section 719 | |
of this Act), and | |
(b) the definition of “control” in that section of that Act applies (with the | |
necessary modifications) in relation to an unincorporated association as | |
it applies in relation to a body corporate. | 30 |
(6) The Treasury may by regulations amend subsection (2) so as to alter the rates | |
or rate bands. | |
231 Mileage allowance relief | |
(1) An employee is entitled to mileage allowance relief for a tax year— | |
(a) if the employee uses a vehicle to which this Chapter applies for | 35 |
business travel, and | |
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(b) the total amount of all mileage allowance payments, if any, made to the | |
employee for the kind of vehicle in question for the tax year is less than | |
the approved amount for such payments applicable to that kind of | |
vehicle. | |
(2) The amount of mileage allowance relief to which an employee is entitled for a | 5 |
tax year is the difference between— | |
(a) the total amount of all mileage allowance payments, if any, made to the | |
employee for the kind of vehicle in question, and | |
(b) the approved amount for such payments applicable to that kind of | |
vehicle. | 10 |
(3) Subsection (1) does not apply if— | |
(a) the employee is a passenger in the vehicle, or | |
(b) the vehicle is a company vehicle. | |
232 Giving effect to mileage allowance relief | |
(1) A deduction is allowed for mileage allowance relief to which an employee is | 15 |
entitled for a tax year. | |
(2) If any of the employee’s earnings— | |
(a) are taxable earnings in the tax year in which the employee receives | |
them, and | |
(b) are not also taxable earnings in that year that fall within subsection (3), | 20 |
the relief is allowed as a deduction from those earnings in calculating net | |
taxable earnings in the year. | |
(3) If any of the employee’s earnings are taxable earnings in the tax year in which | |
the employee remits them to the United Kingdom, there may be deducted from | |
those earnings the amount of any mileage allowance relief— | 25 |
(a) for that tax year, and | |
(b) for any earlier tax year in which the employee was resident in the | |
United Kingdom, | |
which, on the assumptions mentioned in subsection (4), would have been | |
deductible under subsection (2). | 30 |
(4) The assumptions are— | |
(a) that subsection (2)(b) does not apply, and | |
(b) where applicable, that the earnings constitute taxable earnings in the | |
tax year in which the employee receives them. | |
(5) Subsection (3) applies only to the extent that the mileage allowance relief | 35 |
cannot be deducted under subsection (2). | |
(6) A deduction shall not be made twice, whether under subsection (2) or (3), in | |
respect of the same mileage allowance relief. | |
(7) In this section “taxable earnings” or “net taxable earnings” means taxable | |
earnings or net taxable earnings from the employment for the purposes of Part | 40 |
2. | |
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