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(5) A direction under subsection (2)— | |
(a) must specify the employee to whom and the tax year to which it relates, | |
(b) must be given by notice to the appropriate person, and | |
(c) may be withdrawn by notice to the appropriate person from a date | |
specified in the notice. | 5 |
(6) The date so specified may not be earlier than 30 days from the date on which | |
the notice of withdrawal is given. | |
(7) If— | |
(a) a direction under subsection (2) has effect in relation to an employee to | |
whom this section applies, and | 10 |
(b) a payment of, or on account of, the income of the employee is made by | |
the employer in the tax year to which the direction relates, | |
the proportion of the payment determined in accordance with the direction is | |
to be treated for the purposes of PAYE regulations as a payment of PAYE | |
income of the employee. | 15 |
(8) If in any tax year— | |
(a) no direction under subsection (2) has effect in relation to an employee | |
to whom this section applies, and | |
(b) any payment of, or on account of, the income of the employee is made | |
by the employer, | 20 |
the entire payment is to be treated for the purposes of PAYE regulations as a | |
payment of PAYE income of the employee. | |
(9) Subsections (7) and (8) are without prejudice to— | |
(a) any assessment in respect of the income of the employee in question, | |
and | 25 |
(b) any right to repayment of income tax overpaid and any obligation to | |
pay income tax underpaid. | |
(10) In a case where section 689 applies— | |
(a) the references to the employer in subsection (3)(a) are to be read as | |
references to the relevant person, and | 30 |
(b) any reference to a payment made by the employer is to be read as a | |
reference to a payment treated, for the purposes of PAYE regulations, | |
as made by the relevant person. | |
In this subsection “the relevant person” has the same meaning as in section 689. | |
691 Mobile UK workforce | 35 |
(1) This section applies if it appears to the Board of Inland Revenue that— | |
(a) a person (“the relevant person”) has entered into or is likely to enter | |
into an agreement that employees of another person (“the contractor”) | |
are in any period to work for, but not as employees of, the relevant | |
person; | 40 |
(b) payments of, or on account of, PAYE income of the employees in | |
respect of work done in that period are likely to be made by or on behalf | |
of the contractor; and | |
(c) PAYE regulations would apply on the making of such payments but it | |
is likely that income tax will not be deducted, or will not be accounted | 45 |
for, in accordance with the regulations. | |
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(2) The Board may give a direction that, if— | |
(a) any of the employees of the contractor work in any period for, but not | |
as employees of, the relevant person, and | |
(b) any payment is made by the relevant person in respect of work done by | |
the employees in that period, | 5 |
income tax is to be deducted in accordance with the provisions of this section | |
by the relevant person on making the payment. | |
(3) A direction under subsection (2)— | |
(a) must specify the relevant person and the contractor to whom it relates; | |
(b) must be given by notice to the relevant person; and | 10 |
(c) may at any time be withdrawn by notice to the relevant person. | |
(4) The Board must take such steps as are reasonably practicable to ensure that a | |
contractor is supplied with a copy of any notice under subsection (3) which | |
relates to him. | |
(5) If— | 15 |
(a) a direction under subsection (2) has effect, and | |
(b) any employees of the contractor specified in the direction work for, but | |
not as employees of, the relevant person so specified, | |
income tax is, subject to and in accordance with PAYE regulations, to be | |
deducted by the relevant person on making any payment in respect of that | 20 |
work as if so much of the payment as is attributable to work done by each | |
employee were a payment of PAYE income of that employee. | |
692 Organised arrangements for sharing tips | |
(1) PAYE regulations may make provision with respect to organised | |
arrangements for tips to be shared among employees by a person (“P”) who is | 25 |
not the principal employer. | |
(2) PAYE regulations may include provisions which, for the purposes of PAYE | |
regulations— | |
(a) treat every payment made by P to an employee by way of the | |
employee’s share of any tips (including the retention by P of P’s own | 30 |
share if P is an employee) as a payment of PAYE income by P, and | |
(b) treat P as the employer in relation to every such payment. | |
(3) PAYE regulations may also include provisions which— | |
(a) apply if P has failed to comply with any of the requirements of PAYE | |
regulations, and | 35 |
(b) treat the principal employer, for the purposes of PAYE regulations, as | |
making payments to the employees of any tips paid over to P by the | |
principal employer. | |
(4) In this section— | |
“the principal employer” means the person under whose general control | 40 |
and management the employees work; | |
“tips” means gratuities and service charges. | |
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Chapter 4 | |
PAYE: Special types of income | |
Income provided by means of vouchers and tokens | |
693 Cash vouchers | |
(1) If a cash voucher to which Chapter 4 of Part 3 (taxable benefits: vouchers and | 5 |
credit-tokens) applies is received by an employee at any time, the employer is | |
to be treated, for the purposes of PAYE regulations, as making at that time a | |
payment of PAYE income of the employee of an amount equal to the amount | |
ascertained under section 81(2) (benefit of cash voucher treated as earnings). | |
(2) This section does not apply to the provision of a cash voucher if— | 10 |
(a) the voucher is used to meet expenses, and | |
(b) if the amount for which the voucher is capable of being exchanged had | |
been paid directly to the employee by his or her employer, the amount | |
would not have been PAYE income except by virtue of section 70 (sums | |
in respect of expenses). | 15 |
(3) This section does not apply to the provision of a cash voucher if it is exchanged | |
for an amount which— | |
(a) is used to meet expenses, and | |
(b) if it had been paid directly to the employee by the employer, would not | |
have been PAYE income except by virtue of section 70 | 20 |
(4) PAYE regulations may exclude from the scope of this section the provision of | |
cash vouchers in circumstances specified in the regulations. | |
(5) A cash voucher provided for an employee and appropriated to the employee— | |
(a) by attaching it to a card held for the employee, or | |
(b) in any other way, | 25 |
is to be treated for the purposes of this section as having been received by the | |
employee at the time when it is appropriated. | |
694 Non-cash vouchers | |
(1) If a non-cash voucher to which this section applies is received by an employee, | |
the employer is to be treated, for the purposes of PAYE regulations, as making | 30 |
a payment of PAYE income of the employee of an amount equal to the amount | |
ascertained under section 87(2) (benefit of non-cash voucher treated as | |
earnings). | |
(2) This section applies to a non-cash voucher to which Chapter 4 of Part 3 (taxable | |
benefits: vouchers and credit-tokens) applies if— | 35 |
(a) either of the conditions set out below is met with respect to the voucher, | |
and | |
(b) the voucher is not of a description for the time being excluded from the | |
scope of this section by PAYE regulations. | |
(3) The first condition is met with respect to a non-cash voucher if it is capable of | 40 |
being exchanged for anything which, if provided to the employee at the time | |
when the voucher is received, would fall to be regarded as a readily convertible | |
asset. | |
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(4) The second condition is met with respect to a non-cash voucher if (but for | |
section 701(2)(b)) it would fall itself to be regarded as a readily convertible | |
asset. | |
(5) A payment under subsection (1) is made— | |
(a) in the case of a non-cash voucher other than a cheque voucher, at the | 5 |
time when the cost of provision is incurred or, if later, the time when | |
the voucher is received by the employee; | |
(b) in the case of a cheque voucher, at the time when the voucher is handed | |
over in exchange for money, goods or services. | |
(6) For the purposes of subsection (5)— | 10 |
“cheque voucher” has the same meaning as in Chapter 4 of Part 3, | |
“cost of provision”, in relation to a voucher provided by an employer, has | |
the meaning given by section 87; | |
and a cheque voucher that is posted is to be treated as handed over at the time | |
of posting. | 15 |
(7) A non-cash voucher provided for an employee and appropriated to the | |
employee— | |
(a) by attaching it to a card held for the employee, or | |
(b) in any other way, | |
is to be treated for the purposes of this section as having been received by the | 20 |
employee at the time when it is appropriated. | |
695 Credit-tokens | |
(1) On each occasion on which an employee uses a credit-token provided to the | |
employee because of the employee’s employment to obtain— | |
(a) money, or | 25 |
(b) anything which, if provided to the employee at the time when the | |
credit-token is used, would fall to be regarded as a readily convertible | |
asset, | |
the employer is to be treated, for the purposes of PAYE regulations, as making | |
a payment of PAYE income of the employee of an amount equal to the amount | 30 |
ascertained under section 94(2) (benefit of credit-token treated as earnings). | |
(2) The use of a credit-token by an employee to obtain money is excluded from the | |
scope of this section if the money— | |
(a) is used to meet expenses, and | |
(b) if it had been paid directly to the employee by the employer, would not | 35 |
have been PAYE income except by virtue of section 70 (sums in respect | |
of expenses). | |
(3) PAYE regulations may make provision for excluding from the scope of this | |
section any other description of use of a credit-token. | |
Income provided in other ways | 40 |
696 Readily convertible assets | |
(1) If any PAYE income of an employee is provided in the form of a readily | |
convertible asset, the employer is to be treated, for the purposes of PAYE | |
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(1) regulations, as making a payment of that income of an amount equal to the | |
amount given by subsection (2). | |
(2) The amount referred to is the amount which, on the basis of the best estimate | |
that can reasonably be made, is the amount of income likely to be PAYE income | |
in respect of the provision of the asset. | 5 |
697 Enhancing the value of an asset | |
(1) This section applies if— | |
(a) any PAYE income of an employee is provided in the form of anything | |
enhancing the value of an asset in which the employee or a member of | |
the employee’s family or household already has an interest, and | 10 |
(b) that asset, with its value enhanced, would be treated as a readily | |
convertible asset if PAYE income were provided to the employee in the | |
form of the asset at the time of the enhancement. | |
(2) Section 696 has effect as if— | |
(a) the employee had been provided, at the time of the enhancement, with | 15 |
PAYE income in the form of the asset (with its value enhanced), instead | |
of with what enhanced its value, and | |
(b) the reference in subsection (2) to the provision of the asset were a | |
reference to the enhancement of its value. | |
(3) Any reference in this section to enhancing the value of an asset is a reference | 20 |
to— | |
(a) the provision of any services by which the asset or any right or interest | |
in it is improved or otherwise made more valuable, | |
(b) the provision of any property the addition of which to the asset | |
improves it or otherwise increases its value, or | 25 |
(c) the provision of any other enhancement by the application of money or | |
property to the improvement of the asset or to securing an increase in | |
its value or the value of any right or interest in it. | |
(4) There is excluded from the scope of what constitutes enhancing the value of an | |
asset for the purposes of this section any enhancement of value arising on the | 30 |
acquisition by the employee (whether or not as a result of the exercise of a right | |
to acquire shares) of— | |
(a) any shares acquired by the employee under a scheme approved under | |
Schedule 3 (approved SAYE option schemes) or 4 (approved CSOP | |
schemes), or Schedule 9 to ICTA (approved profit sharing schemes); | 35 |
(b) any right over or interest in shares obtained or acquired by the | |
employee under such a scheme; or | |
(c) any shares acquired by the employee as a result of the exercise of a right | |
over shares obtained before 27th November 1996, | |
if the shares in question form part of the share capital of a company falling | 40 |
within section 701(3). | |
(5) PAYE regulations may make provision excluding such other matters as may be | |
described in the regulations from the scope of what constitutes enhancing the | |
value of an asset for the purposes of this section. | |
698 PAYE: shares ceasing to be only conditional or being disposed of | 45 |
(1) This section applies if— | |
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(a) either of the following events occurs— | |
(i) shares cease, without the employee ceasing to have a beneficial | |
interest in them, to be shares in which the employee’s interest is | |
only conditional; | |
(ii) in a case where shares have not so ceased, the employee sells or | 5 |
otherwise disposes of the employee’s interest or any other | |
beneficial interest in the shares; and | |
(b) as a result, an amount is chargeable on any person (“the relevant | |
person”) by virtue of section 427(1). | |
(2) This section also applies if— | 10 |
(a) an event occurs which is treated for the purposes of section 427 (charge | |
on interest in shares ceasing to be only conditional or on disposal) as an | |
event falling within subsection (1)(b) of that section by virtue of section | |
431 (disposal where employee dies); and | |
(b) as a result, an amount is chargeable on any person (“the relevant | 15 |
person”) by virtue of section 427(1). | |
(3) If this section applies, sections 684 to 691 and 696 have effect as if— | |
(a) in addition to the provision to the relevant person of the employee’s | |
interest in the shares, a further interest in those shares were provided | |
to the relevant person at the time of the event in question; and | 20 |
(b) the further interest were not subject to any terms by virtue of which it | |
would fall for the purposes of Chapter 2 of Part 7 (conditional interests | |
in shares) to be treated as only conditional. | |
(4) Section 696 as applied by subsection (3) has effect as if the reference in | |
subsection (2) of that section to the amount of income likely to be PAYE income | 25 |
in respect of the provision of the asset were a reference to the amount on which | |
tax is likely to be chargeable by virtue of Chapter 2 of Part 7 in respect of the | |
event in question. | |
(5) Expressions used in this section and any provisions of Chapter 2 of Part 7 have | |
the same meanings in this section as in those provisions. | 30 |
699 PAYE: conversion of shares | |
(1) This section applies if— | |
(a) at a time when the employee has a beneficial interest in them, shares are | |
converted into shares of a different class as a result of an entitlement to | |
convert them which has been conferred on the holder, and | 35 |
(b) as a result, an amount is chargeable on any person (“the relevant | |
person”) by virtue of section 438(1). | |
(2) This section also applies if— | |
(a) an event occurs which is treated for the purposes of section 438 (charge | |
on conversion of shares) as an event falling within subsection (1) of that | 40 |
section by virtue of section 444 (conversion in consequence of death); | |
and | |
(b) as a result, an amount is chargeable on any person (“the relevant | |
person”) by virtue of section 438(1). | |
(3) If this section applies, sections 684 to 691 and 696 have effect as if, in addition | 45 |
to the original provision to the relevant person of the convertible shares, the | |
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(3) shares into which they were converted were also provided to the relevant | |
person at the time of the event in question. | |
(4) Subsection (3) applies in a case where the convertible shares were themselves | |
acquired— | |
(a) by means of a taxable conversion (as defined in section 439(6)), or | 5 |
(b) by means of a series of such conversions, | |
as if the reference to the original provision of the convertible shares were a | |
reference to the provision of the shares which were converted by the earlier or | |
earliest conversion. | |
(5) Section 696 as applied by subsection (3) has effect as if the reference in | 10 |
subsection (2) of that section to the amount of income likely to be PAYE income | |
in respect of the provision of the asset were a reference to the amount on which | |
tax is likely to be chargeable by virtue of Chapter 3 of Part 7 (convertible shares) | |
in respect of the event in question. | |
(6) Expressions used in this section and any provisions of Chapter 3 of Part 7 have | 15 |
the same meanings in this section as in those provisions | |
700 PAYE: gains from share options | |
(1) This section applies if— | |
(a) a gain is realised by the exercise, assignment or release of a right to | |
acquire shares, and | 20 |
(b) as a result, an amount is chargeable on any person (“the relevant | |
person”) by virtue of section 476 or 477 (charge on exercise etc. of share | |
option). | |
(2) In the case of the exercise of a right to acquire shares, section 696 has effect as | |
if the relevant person were being provided with PAYE income in the form of | 25 |
the shares— | |
(a) at the time the relevant person acquires the shares in the exercise of the | |
right, and | |
(b) in respect of the employment because of which the relevant person was | |
granted the right. | 30 |
(3) In the case of the assignment or release of a right to acquire shares, sections 684 | |
to 691 and 696 have effect— | |
(a) in so far as the consideration for the assignment or release takes the | |
form of a payment, as if so much of that payment as does not exceed— | |
(i) the relevant proportion of the amount chargeable by virtue of | 35 |
section 476 or 477 in respect of the assignment or release of the | |
right, less | |
(ii) the amount of any relief likely to be available under section 481 | |
(deductible amount in respect of secondary Class 1 | |
contributions met by employee), | 40 |
were a payment of PAYE income of the relevant person; and | |
(b) in so far as that consideration consists in the provision of an asset, as if | |
the provision of the asset were the provision of PAYE income in the | |
form of the asset— | |
(i) to the relevant person, and | 45 |
(ii) in respect of the employment because of which the relevant | |
person was granted the right. | |
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