Income Tax (Earnings and Pensions) Act 2003 (c. 1)

(The document as of February, 2008)

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(b) the facilities are provided so as to be available generally to that employer's employees.

262 Benefits not exempted by section 261

(1) Section 261 (exemption of recreational benefits) does not apply to the following benefits--

(a) an interest in or the use of any of the following--

(i) a mechanically propelled vehicle,

(ii) holiday or other overnight accommodation, or

(iii) facilities which include, or are provided in association with, a right or opportunity to make use of holiday or overnight accommodation,

(b) facilities provided on domestic premises, or

(2) In this section--

"domestic premises" means--
(a)
premises used wholly or mainly as a private dwelling, or
(b)
land or other premises belonging to, or enjoyed with, premises so used, and
"vehicle" includes a ship, boat or other vessel, an aircraft and a hovercraft.

263 Power to alter benefits to which section 261 applies

The Treasury may by regulations provide that section 261--

(a) does not apply to a benefit specified in the regulations,

(b) applies to a benefit so specified only where such conditions as the regulations specify are met in relation to the terms on which, and the persons to whom, it is provided, or

(i) facilities that do not meet the conditions in section 261(3) to (5), or

(ii) a benefit within section 262.

Annual parties and functions

264 Annual parties and functions

(1) This section applies to an annual party or similar annual function provided for an employer's employees and available to them generally or available generally to those at a particular location.

(2) Where in the tax year only one annual party or similar annual function to which this section applies is provided for the employer's employees, or the employees in question, no liability to income tax arises in respect of its provision if the cost per head of the party or function does not exceed £75.

(3) Where in the tax year two or more such parties or functions are so provided, no liability to income tax arises in respect of the provision of one or more of them ("the exempt party or parties") if the cost per head of the exempt party or parties does not exceed £75 or £75 in aggregate.

(4) For the purposes of this section, the cost per head of a party or function is the total cost of providing--

(a) the party or function, and

(b) any transport or accommodation incidentally provided for persons attending it (whether or not they are the employer's employees),

divided by the number of those persons.

(5) That total cost includes any value added tax on the expenses incurred in providing the party, function, transport or accommodation.

Entertainment

265 Third party entertainment

(1) No liability to income tax arises in respect of the provision of entertainment for an employee or a member of the employee's family or household if conditions A to C are met.

(2) Condition A is that the person providing the entertainment is not the employer or a person connected with the employer.

(3) Condition B is that neither the employer nor a person connected with the employer has directly or indirectly procured its provision.

(4) Condition C is that it is not provided--

(a) in recognition of particular services performed by the employee in the course of the employment, or

(b) in anticipation of particular services to be so performed.

(5) In this section "entertainment" includes hospitality of any kind.

Chapter 6 Exemptions: non-cash vouchers and credit-tokens

General exemptions: use for exempt benefits

266 Exemption of non-cash vouchers for exempt benefits

(1) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher if or to the extent that the voucher is used to obtain anything the direct provision of which would fall within--

(a) section 237(1) (parking provision),

(b) section 246 (transport between home and work for disabled employees: general),

(d) section 248 (transport home: late night working and failure of car-sharing arrangements), or

(e) section 265 (third party entertainment).

(2) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher if the voucher evidences the employee's entitlement to use anything the direct provision of which would fall within--

(a) section 242 (works transport services),

(b) section 243 (support for public bus services), or

(3) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher if the voucher can only be used to obtain anything the direct provision of which would fall within--

(a) section 245 (travelling and subsistence during public transport strikes),

(b) section 261 (exemption of recreational benefits),

(d) section 296 (armed forces' leave travel facilities), or

(e) section 317 (subsidised meals).

(4) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher if the voucher evidences the employee's entitlement to a benefit in respect of which no charge arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) because of regulations under section 210 (power to exempt minor benefits).

(5) For the purposes of this section direct provision is taken to fall within a section if it would do so if the employee were not in excluded employment.

267 Exemption of credit-tokens used for exempt benefits

(1) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a credit-token if or to the extent that the token is used to obtain anything the direct provision of which--

(a) would fall within one of the provisions specified in subsection (2), or

(b) would do so if the employee were not in excluded employment.

(2) Those provisions are--

(a) section 237(1) (parking provision),

(b) section 245 (travelling and subsistence during public transport strikes),

(d) section 247 (provision of cars for disabled employees),

(e) section 248 (transport home: late night working and failure of car-sharing arrangements), and

(f) section 265 (third party entertainment).

Exemptions for particular non-cash vouchers and credit-tokens

268 Exemption of vouchers and tokens for incidental overnight expenses

(1) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher or a credit-token if or to the extent that the voucher or token is used by an employee to obtain goods, services or money if conditions A to C are met.

(2) In the case of goods or services, condition A is that--

(a) obtaining them is incidental to the employee's absence from the place where the employee normally lives, and

(b) that absence is for a continuous period in relation to which the overnight stay conditions are met ("the qualifying period").

(3) In the case of money, condition A is that--

(a) it is obtained for the purpose of obtaining goods or services, and

(b) obtaining them is incidental to such an absence during such a period.

(4) Condition B is that an amount would not be deductible under section 362 or 363 (deductions where non-cash voucher or credit-token provided) in respect of the cost of obtaining the goods or services.

(5) Condition C is that the exemption provisions total in respect of the qualifying period does not exceed the permitted amount.

(6) In this section--

"the overnight stay conditions" has the same meaning as in section 240 (exemption of incidental overnight expenses and benefits) (see section 240(4)), and
"the exemption provisions total" and "the permitted amount" have the same meaning as in section 241 (incidental overnight expenses and benefits: overall exemption limit) (see section 241(2) and (3)).

269 Exemption where benefits or money obtained in connection with taxable car or van or exempt heavy goods vehicle

(1) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher or a credit-token if or to the extent that the voucher or token is used by the employee or a member of the employee's family for obtaining--

(a) goods or services in connection with a taxable car or van or an exempt heavy goods vehicle, or

(b) money which is spent on such goods or services.

(2) Subsection (1) applies where the goods in question are fuel for a car, but see section 149(3) (by virtue of which such use of a voucher or token is treated as the provision of the fuel for the purposes of section 149 (benefit of car fuel treated as earnings)).

(3) For the purposes of this section--

(a) "car" and "van" have the meaning given by section 115, and

(b) a car or van is "taxable" if the cash equivalent of the benefit of it is treated as the employee's earnings for the tax year in which the voucher or token is used under Chapter 6 of Part 3 (taxable benefits: cars, vans and related benefits).

(4) For the purposes of this section--

(a) "heavy goods vehicle" has the same meaning as in section 238 (modest private use of heavy goods vehicles), and

(b) a heavy goods vehicle is "exempt" if it is made available in the tax year to the employee in such circumstances that section 238 applies or would apply if the employee were not in excluded employment.

270 Exemption for small gifts of vouchers and tokens from third parties

(1) No liability to income tax arises by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) in respect of a non-cash voucher or a credit-token if conditions A to C are met.

(2) Condition A is that the voucher or token is provided as a gift.

(3) Condition B is that it is only capable of being used to obtain goods.

(4) Condition C is that it meets conditions A to C and E in section 324 (general exemption of small gifts from third parties).

Chapter 7 Exemptions: removal benefits and expenses

Exemption of removal benefits and expenses: general

271 Limited exemption of removal benefits and expenses: general

(1) No liability to income tax in respect of earnings arises by virtue of--

(a) the provision of removal benefits to which this section applies, or

(b) the payment or reimbursement of removal expenses to which this section applies.

(2) Subsection (1) does not apply if (disregarding this section) the earnings are general earnings to which either of the following sections applies--

(a) section 22 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or

(b) section 26 (foreign earnings for year when employee resident, but not ordinarily resident, in UK).

(3) Subsection (1) is subject to section 287 (limit on exemption).

272 Removal benefits and expenses to which section 271 applies

(1) Benefits are removal benefits to which section 271 applies if--

(a) they are reasonably provided in connection with a change of the employee's residence which meets the conditions in section 273,

(b) they are provided on or before the limitation day (see section 274), and

(i) section 277 (acquisition benefits and expenses),

(ii) section 278 (abortive acquisition benefits and expenses),

(iii) section 279 (disposal benefits and expenses),

(iv) section 280 (transporting belongings),

(v) section 281 (travelling and subsistence),

(vi) section 285 (replacement of domestic goods).

(2) A benefit is within this subsection if it is a non-cash voucher, cash voucher or credit-token used--

(a) to obtain goods or services the direct provision of which would be a benefit within one of the provisions specified in subsection (1)(c)(i) to (vi), or

(b) to obtain money for the purpose of obtaining such goods or services or meeting expenses within one of those provisions or section 284 (bridging loan expenses).

(3) Expenses are removal expenses to which section 271 applies if--

(a) they are reasonably incurred by the employee in connection with a change of the employee's residence which meets the conditions in section 273,

(b) they are incurred on or before the limitation day, and

(c) they are within one of the provisions referred to in subsection (1)(c)(i) to (vi) or within section 284 (bridging loan expenses).

273 Conditions applicable to change of residence

(1) The conditions referred to in section 272(1)(a) and (3)(a) which apply to the change of the employee's residence are conditions A to C.

(2) Condition A is that the change of residence results from one of the following changes--

(a) the employee becoming employed,

(b) an alteration of the duties of the employment, or

(3) Condition B is that the change of residence is made wholly or mainly to allow the employee to reside within a reasonable daily travelling distance of the place where the employee normally performs or is normally to perform the duties of the employment after the employment change (see section 275).

(4) Condition C is that the employee's former residence is not within a reasonable daily travelling distance of that place.

274 Meaning of "the limitation day"

(1) In this Chapter "the limitation day", in relation to an employee's change of residence, means the last day of the tax year after that in which the employee begins to perform the duties of the employment after the employment change, but this is subject to any direction under subsection (2).

(2) The Inland Revenue may direct that the last day of a later tax year is the limitation day in relation to any particular change of residence if it appears to them reasonable to do so having regard to all the circumstances of that change.

275 Meaning of "the employment change"

In this Chapter "the employment change", in relation to an employee's change of residence, means whichever of the changes specified in section 273(2) results in the change of residence.

276 Meaning of "residence", "former residence" and "new residence" etc.

(1) If an employee has more than one residence, references in this Chapter to the employee's residence are references to the employee's main residence.

(2) In this Chapter, in relation to a change of the employee's residence--

(a) references to the former residence are references to the employee's residence before the change, and

(b) references to the new residence are references to the employee's residence after the change.

(3) In this Chapter references to an interest in a residence are, in the case of a building, references to an estate or interest in the land concerned.

Benefits and expenses within this Chapter

277 Acquisition benefits and expenses

(1) This section applies if an interest in the employee's new residence is acquired by--

(a) the employee,

(b) one or more members of the employee's family or household, or

(2) The following benefits are within this section--

(a) legal services connected with the acquisition of the interest, including legal services connected with any loan raised by the employee to acquire it,

(b) the waiving of any procurement fees connected with any such loan,

(c) the waiving of any amount payable in respect of insurance effected to cover risks incurred by the maker of any such loan because the loan equals the whole, or a substantial part, of the value of the interest,

(d) any survey or inspection of the residence undertaken in connection with the acquisition, and

(e) the connection of any utility serving the new residence for use by the employee or by the employee and one or more members of the employee's family or household.

(3) The following expenses are within this section--

(a) sums paid for any services within subsection (2)(a), (d) or (e),

(b) any procurement fees connected with any loan raised by the employee to acquire the interest,

(d) fees payable to an appropriate registry or appropriate register in connection with the acquisition, and

(e) stamp duty charged on the acquisition.

(4) In this section references to a loan raised by the employee include a loan raised by--

(a) one or more members of the employee's family or household, or

(b) the employee and one or more members of the employee's family or household.

(5) In this section--

"appropriate registry" means--
(a)
Her Majesty's Land Registry,
(b)
the Land Registry in Northern Ireland, or
(c)
the Registry of Deeds for Northern Ireland, and
"appropriate register" means any register under the management and control of the Keeper of the Registers of Scotland.

278 Abortive acquisition benefits and expenses

Benefits or expenses are within this section if--

(a) they are benefits provided or expenses incurred with a view to the acquisition of an interest in a residence,

(b) the interest is not acquired--

(i) because of circumstances outside the control of the person seeking to acquire it, or

(ii) because that person reasonably declines to proceed, and

279 Disposal benefits and expenses

(1) This section applies if the employee has an interest in the former residence and because of the change of residence it is disposed of or is intended to be disposed of.

(2) The following benefits are within this section--

(a) legal services connected with the disposal or intended disposal, including legal services connected with the redemption of a related loan,

(b) the waiving of any penalty for redeeming a related loan for the purpose of the disposal or intended disposal,

(d) services connected with the advertisement of the disposal or intended disposal,

(e) the disconnection, for the purpose of the disposal or intended disposal, of any utility serving the former residence, and

(f) services connected with maintaining, insuring, or preserving the security of, the former residence at any time when it is unoccupied pending the disposal or intended disposal.

(3) The following expenses are within this section--

(a) sums paid for any services within subsection (2)(a), (c), (d) or (e),

(b) any penalty for redeeming a related loan for the purpose of the disposal or intended disposal,

(c) rent paid in respect of the former residence at any time when it is unoccupied pending the disposal or intended disposal, and

(d) expenses of maintaining, insuring, or preserving the security of the former residence at any time when it is unoccupied pending the disposal or intended disposal.

(4) In this section references to the employee having an interest in a residence include--

(a) one or more members of the employee's family or household having such an interest, or

(b) the employee and one or more members of the employee's family or household having such an interest.

(5) A loan is a "related loan" for this purpose if--

(a) it was raised to obtain an interest in the former residence, or

(b) it is secured on such an interest, or

280 Transporting belongings

(1) The following benefits are within this section--

(a) the transportation of domestic belongings from the employee's former residence to the employee's new residence, and

(b) the effecting of insurance to cover such transportation.

(2) The following expenses are within this section--

(a) expenses connected with such transportation, and

(b) the costs of any such insurance.

(3) In this section--

"domestic belongings" means belongings of the employee or of members of the employee's family or household, and
"transportation" includes--
(a)
packing and unpacking belongings,
(b)
temporarily storing them, where there is not a direct move from the former to the new residence,
(c)
detaching domestic fittings from the former residence, where they are to be taken to the new residence, and
(d)
attaching domestic fittings to the new residence and adapting them, where they are brought from the former residence.

281 Travelling and subsistence

(1) The following benefits are within this section--

(a) subsistence and facilities for travel provided for the employee and members of the employee's family or household for temporary visits to the new area for purposes connected with the change of residence,

(b) any other subsistence provided for the employee,

(i) the place where the employee's new duties are normally performed, or

(ii) the new place where the duties of the employee's employment are normally performed, or

(iii) temporary living accommodation of the employee,

(d) where the employment change is within section 273(2)(b) or (c) (change of duties or place of performance), facilities provided for the employee for travel before the change between the employee's new residence and--

(i) the place where the employee normally performs the duties of the employment before the change, or

(ii) temporary living accommodation of the employee,

(e) facilities provided for the employee and members of the employee's family or household for travel from the employee's former residence to the employee's new residence in connection with the change of residence,

(f) subsistence provided for a relevant child while the child stays in education-linked living accommodation,

(g) facilities provided for a relevant child for travel between education-linked living accommodation and the employee's accommodation.

(2) For the purposes of this section, "education-linked living accommodation", in relation to a relevant child, means living accommodation where the child stays for the purpose of securing continuity in education, being--

(a) accommodation in the new area where the child stays before the employee's change of residence,

(b) accommodation in the former area where the child stays after that change,

(c) accommodation in the new area where the child stays while the employee is living in temporary living accommodation in the former area, or

(d) accommodation in the former area where the child stays while the employee is living in temporary living accommodation in the new area.

(3) For the purposes of subsection (1)(g) "the employee's accommodation", in relation to travel to or from education-linked accommodation, means--

(a) if that accommodation is within subsection (2)(a), the employee's former residence,

(b) if that accommodation is within subsection (2)(b), the employee's new residence, and

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