Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Schedule 14 — Vans
353

(b)
sections 155, 157 and 158 apply as if the replacement van
were the normal van.
Van fuel: benefit treated as earnings
160
Benefit of van fuel treated as earnings
(1)
If in a tax year—
5
(a)
fuel is provided for a van by reason of an employee’s
employment,
(b)
that person is chargeable to tax in respect of the van by virtue
of section 154, and
(c)
the cash equivalent of the van for that year is that under
10
section 155(2)(b),

the cash equivalent of the benefit of the fuel is to be treated as
earnings from the employment for that year.
(2)
The cash equivalent of the benefit of the fuel is calculated in
accordance with sections 161 to 164.
15
(3)
Fuel is to be treated as provided for a van, in addition to any other
way in which it may be provided, if—
(a)
any liability in respect of the provision of fuel for the van is
discharged,
(b)
a non-cash voucher or a credit-token is used to obtain fuel for
20
the van,
(c)
a non-cash voucher or a credit-token is used to obtain money
which is spent on fuel for the van, or
(d)
any sum is paid in respect of expenses incurred in providing
fuel for the van.
25
(4)
References in this section to fuel do not include any facility or means
for supplying electrical energy for an electrically propelled vehicle.
161
Van fuel: the cash equivalent
The cash equivalent of the benefit of the fuel is—
(a)
where the tax year is the tax year 2005-06 or 2006-07, nil, and
30
(b)
where the tax year is a later tax year, £500.
162
Van fuel: nil cash equivalent
(1)
The cash equivalent of the benefit of the fuel is nil if condition A or B
is met.
(2)
Condition A is met if in the tax year in question—
35
(a)
the employee is required to make good to the person
providing the fuel the whole of the expense incurred by that
person in connection with the provision of the fuel for the
employee’s private use, and
(b)
the employee does make good that expense.
40
(3)
Condition B is met if in the tax year in question the fuel is made
available only for business travel (see section 171(1)).

Finance Bill
Schedule 14 — Vans
354

163
Van fuel: proportionate reduction of cash equivalent
(1)
The cash equivalent of the benefit of the fuel is to be proportionately
reduced if for any part of the tax year in question the van for which
the fuel is provided is unavailable (within the meaning of section 156
(reduction for periods when van unavailable)).
5
(2)
But if section 159 (van temporarily replaced) applies—
(a)
section 160 applies as if the replacement van were the normal
van, and
(b)
for the purposes of subsection (1) the replacement van is to be
treated as unavailable on the days during the period on
10
which it replaces the normal van.
(3)
The cash equivalent of the benefit of the fuel is also to be
proportionately reduced if for any part of the tax year in question—
(a)
the facility for the provision of fuel as mentioned in section
160(1) is not available,
15
(b)
the fuel is made available only for business travel (see section
171(1)), or
(c)
the employee is required to make good to the person
providing the fuel the whole of the expense incurred by that
person in connection with the provision of the fuel for the
20
employee’s private use and the employee does make good
that expense.
(4)
The fact that any of the conditions specified in subsection (3) is met
for part of a tax year is to be disregarded if there is a time later in that
year when none of those conditions is met.
25
(5)
Where the cash equivalent is to be proportionately reduced under
subsection (1) or (3) (or under both those subsections), the reduced
amount is given by the formula—
where—
CE is the amount of the cash equivalent before any reduction,
30
Y is the number of days in the tax year in question, and
D is the total number of days in the tax year on which either the
van is unavailable or one or more of the conditions in
subsection (3) is met.
164
Van fuel: reduction of cash equivalent
35
If a reduction of the cash equivalent of the benefit of the van for
which the fuel is provided is made under section 157 (reduction of
cash equivalent where van is shared), a corresponding reduction is
to be made in relation to the cash equivalent of the benefit of the
fuel.”
40
6
After section 169 insert—
“169A
Van available to more than one member of family or household
employed by same employer
(1)
This section applies where—

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Schedule 15 — Charge to income tax on benefits received by former owner of property
355

(a)
an employee (“E”) and a member of the employee’s family or
household (“M”) are employed by the same employer, and
(b)
as a result of a van being made available to M in a tax year, E
would (apart from this section) be chargeable to tax in respect
of the van in that year by virtue of section 154.
5
(2)
The cash equivalent of the benefit of the van and of any fuel provided
for the van 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 van in that year by
virtue of section 154, or
10
(b)
where M’s employment is an excluded employment, M had
the benefit of the van in M’s own right as an employee and
condition A or B is met.
(3)
Condition A is met if equivalent vans are made available on the same
terms to employees who—
15
(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 employer who are employed in employment which is
not an excluded employment.
(4)
Condition B is met if the making available of an equivalent van is in
20
accordance with the normal commercial practice for an employment
of the kind held by M.”
7     (1)
Section 170 (orders etc.) is amended as follows.
      (2)
After subsection (1) insert—
“(1A)
The Treasury may by order substitute a different amount for that for
25
the time being specified in—
(a)
section 155(2)(a) (cash equivalent where van subject only to
restricted private use by employee), and
(b)
section 155(3)(b) (cash equivalent in other cases).
      (3)
In subsection (2), after “(1)” insert “or (1A)”.
30
      (4)
In subsection (5), insert at the end “or section 161(b) (van fuel: cash
equivalent)”.
8
In section 237 (exemption from Chapter 10 of Part 3 in respect of provision
of workplace parking), in subsection (3)(a) (car parking space to be
“workplace parking”), for “car parking space” substitute “parking space for
35
a car or van”.
Schedule 15
Section 84

Charge to income tax on benefits received by former owner of property
Introductory
1
In this Schedule—
40

“IHTA 1984” means the Inheritance Tax Act 1984 (c. 51);

“the 1986 Act” means the Finance Act 1986 (c. 41);

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Schedule 15 — Charge to income tax on benefits received by former owner of property
356


“chattel” means any tangible movable property (or, in Scotland,
corporeal movable property) other than money;

“excluded transaction” has the meaning given by paragraph 10;

“intangible property” means any property other than chattels or
interests in land;
5

“interest in land” has the same meaning as in Chapter 4 of Part 6 of
IHTA 1984;

“land” has the same meaning as in IHTA 1984;

“prescribed” means prescribed by regulations;

“property” has the same meaning as in IHTA 1984;
10

“regulations” means regulations made by the Treasury under this
Schedule;

“settlement” and “settled property” have the same meanings as in
IHTA 1984.
2
Section 839 of the Taxes Act 1988 (connected persons) applies for the
15
purposes of this Schedule, but as if in that section “relative” included uncle,
aunt, nephew and niece and “settlement”, “settlor” and “trustee” had the
same meanings as in IHTA 1984.
Land
3     (1)
This paragraph applies where—
20
(a)
an individual (“the chargeable person”) occupies any land (“the
relevant land”), whether alone or together with other persons, and
(b)
the disposal condition or the contribution condition is met as
respects the land.
      (2)
The disposal condition is that—
25
(a)
at any time after 17th March 1986 the chargeable person owned an
interest—
(i)
in the relevant land, or
(ii)
in other property the proceeds of the disposal of which were
(directly or indirectly) applied by another person towards the
30
acquisition of an interest in the relevant land, and
(b)
the chargeable person has disposed of all, or part of, his interest in
the relevant land or the other property, otherwise than by an
excluded transaction.
      (3)
The contribution condition is that at any time after 17th March 1986 the
35
chargeable person has directly or indirectly provided, otherwise than by an
excluded transaction, any of the consideration given by another person for
the acquisition of—
(a)
an interest in the relevant land, or
(b)
an interest in any other property the proceeds of the disposal of
40
which were (directly or indirectly) applied by another person
towards the acquisition of an interest in the relevant land.
      (4)
For the purposes of this paragraph a disposition which creates a new interest
in land out of an existing interest in land is to be taken to be a disposal of part
of the existing interest.
45
      (5)
Where this paragraph applies to a person in respect of the whole or part of a
year of assessment, an amount equal to the chargeable amount determined
under paragraph 4 is to be treated as income of his chargeable to income tax.

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Schedule 15 — Charge to income tax on benefits received by former owner of property
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4     (1)
For any taxable period the chargeable amount in relation to the relevant land
is the appropriate rental value (as determined under sub-paragraph (2)), less
the amount of any payments which, in pursuance of any legal obligation, are
made by the chargeable person during the period to the owner of the
relevant land in respect of the occupation of the land by the chargeable
5
person.
      (2)
The appropriate rental value is—

where—
R is the rental value of the relevant land for the taxable period,
DV is—
10
(a)
in a case falling within paragraph 3(2)(a)(i), the value as at
the valuation date of the interest in the relevant land that
was disposed of as mentioned in paragraph 3(2)(b) by the
chargeable person or, where the disposal was a non-exempt
sale, the appropriate proportion of that value,
15
(b)
in a case falling within paragraph 3(2)(a)(ii), such part of the
value of the relevant land at the valuation date as can
reasonably be attributed to the property originally disposed
of by the chargeable person or, where the original disposal
was a non-exempt sale, to the appropriate proportion of that
20
property, and
(c)
in a case falling within paragraph 3(3), such part of the value
of the relevant land at the valuation date as can reasonably
be attributed to the consideration provided by the
chargeable person, and
25
V is the value of the relevant land at the valuation date.
      (3)
The “rental value” of the land for the taxable period is the rent which would
have been payable for the period if the property had been let to the
chargeable person at an annual rent equal to the annual value.
      (4)
The disposal by the chargeable person of an interest in land is a “non-exempt
30
sale” if (although not an excluded transaction) it was a sale of his whole
interest in the property for a consideration paid in money in sterling or any
other currency; and, in relation to a non-exempt sale, “the appropriate
proportion” is—

where—
35
MV is the value of the interest in land at the time of the sale;
P is the amount paid.
      (5)
Regulations may—
(a)
in relation to any valuation date, provide for a valuation of the
relevant land or any interest in the relevant land by reference to an
40

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Schedule 15 — Charge to income tax on benefits received by former owner of property
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earlier valuation date to apply subject to any prescribed adjustments,
and
(b)
in relation to any year of assessment, provide for a determination of
the rental value of the land by reference to any earlier year of
assessment to apply subject to any prescribed adjustments.
5
      (6)
In this paragraph—
“the taxable period” means the year of assessment, or part of a year of
assessment, during which paragraph 3 applies to the chargeable
person;
“the valuation date”, in relation to a taxable period, means such date
10
as may be prescribed.
5     (1)
For the purposes of paragraph 4 the annual value of the relevant land is the
rent which might reasonably be expected to be obtained on a letting from
year to year if—
(a)
the tenant undertook to pay all taxes, rates and charges usually paid
15
by a tenant, and
(b)
the landlord undertook to bear the costs of the repairs and insurance
and the other expenses (if any) necessary for maintaining the
property in a state to command that rent.
      (2)
For the purposes of sub-paragraph (1) that rent—
20
(a)
is to be taken to be the amount that might reasonably be expected to
be so obtained in respect of a letting of the land, and
(b)
is to be calculated on the basis that the only amounts that may be
deducted in respect of services provided by the landlord are
amounts in respect of the cost to the landlord of providing any
25
relevant services.
      (3)
In this paragraph “relevant service” means a service other than the repair,
insurance or maintenance of the premises.
Chattels
6     (1)
This paragraph applies where—
30
(a)
an individual (“the chargeable person”) is in possession of, or has the
use of, a chattel, whether alone or together with other persons, and
(b)
the disposal condition or the contribution condition is met as
respects the chattel.
      (2)
The disposal condition is that—
35
(a)
at any time after 17th March 1986 the chargeable person had
(whether alone or jointly with others) owned—
(i)
the chattel, or
(ii)
any other property the proceeds of the disposal of which
were (directly or indirectly) applied by another person
40
towards the acquisition of the chattel, and
(b)
the chargeable person disposed of all or part of his interest in the
chattel or other property otherwise than by an excluded transaction.
      (3)
The contribution condition is that at any time after 17th March 1986 the
chargeable person had directly or indirectly provided, otherwise than by an
45
excluded transaction, any of the consideration given by another person for
the acquisition of—
(a)
the chattel, or

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Schedule 15 — Charge to income tax on benefits received by former owner of property
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(b)
any other property the proceeds of the disposal of which were
(directly or indirectly) applied by another person towards the
acquisition of the chattel.
      (4)
For the purposes of this paragraph, a disposition which creates a new
interest in a chattel out of an existing interest in a chattel is to be taken to be
5
a disposal of part of the existing interest.
      (5)
Where this paragraph applies to a person in respect of the whole or part of a
year of assessment, an amount equal to the chargeable amount determined
under paragraph 7 is to be treated as income of his chargeable to income tax.
7     (1)
For any taxable period the chargeable amount in relation to any chattel is the
10
appropriate amount (as determined under sub-paragraph (2)), less the
amount of any payments which, in pursuance of any legal obligation, are
made by the chargeable person during the period to the owner of the chattel
in respect of the possession or use of the chattel by the chargeable person.
      (2)
The appropriate amount is—
15

where—
N is the amount of the interest that would be payable for the taxable
period if interest were payable at the prescribed rate on an amount
equal to the value of the chattel as the valuation date,
DV is—
20
(a)
in a case falling within paragraph 6(2)(a)(i), the value as at
the valuation date of the interest in the chattel that was
disposed of as mentioned in paragraph 6(2)(b) by the
chargeable person or, where the disposal was a non-exempt
sale, the appropriate proportion of that value,
25
(b)
in a case falling within paragraph 6(2)(a)(ii), such part of the
value of the chattel at the valuation date as can reasonably
be attributed to the property originally disposed of by the
chargeable person or, where the original disposal was a
non-exempt sale, to the appropriate proportion of that
30
property, and
(c)
in a case falling within paragraph 6(3), such part of the value
of the chattel at the valuation date as can reasonably be
attributed to the consideration provided by the chargeable
person, and
35
V is the value of the chattel at the valuation date.
      (3)
The disposal by the chargeable person of an interest in a chattel is a “non-
exempt sale” if (although not an excluded transaction) it was a sale of his
whole interest in the chattel for a consideration paid in money in sterling or