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

(The document as of February, 2008)

-- Back --

Page 15

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34 | P.35 | P.36 | P.37 | P.38 | P.39 | P.40 | P.41 | P.42 | P.43 | P.44 | P.45 | P.46 | P.47 | P.48 | P.49 | P.50 | P.51 | P.52

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

(4) The cost of providing subsistence or travel of a kind described in subsection (1) is an expense within this section.

(5) Subsections (1) and (4) are subject to section 282 (exclusion from this section of benefits and expenses where deduction allowed), and subsection (1) is also subject to section 283 (exclusion from this section of taxable car and van facilities).

(6) In this section--

"new duties" means--
(a)
if the employment change is within section 273(2)(a) (change of employer), the duties of the employee's new employment, and
(b)
if the employment change is within section 273(2)(b) (change of duties), the new duties of the employment,
"former area" means the area round or near the former residence of the employee,
"new area" means--
(a)
if the employment change is within section 273(2)(a) or (b) (change of employer or duties), the area round or near the place where the employee's new duties normally are or are to be performed, and
(b)
if the employment change is within section 273(2)(c) (change of place of performance), the area round or near the new place where the duties of the employee's employment normally are or are to be performed,
"relevant child" means a person who is a member of the employee's family or household and is aged under 19 at the beginning of the tax year in which the employment change occurs, and
"subsistence" means food, drink and temporary living accommodation.

282 Exclusion from section 281 of benefits and expenses where deduction allowed

(1) Benefits and expenses are excluded from section 281 (travelling and subsistence) if or to the extent that an amount is deductible in respect of the cost of the benefits or of the expenses under any of the following provisions.

(2) They are--

(a) section 341 (travel at start or finish of overseas employment),

(b) section 342 (travel between employments where duties performed abroad), and

(c) Chapter 5 of Part 5 except section 376 (deductions for earnings representing benefits or reimbursed expenses in respect of certain foreign travel).

(3) If an amount is so deductible in respect of part only of the cost of a benefit, the part of the benefit excluded by this section is to be determined on a just and reasonable basis.

283 Exclusion from section 281 of taxable car and van facilities

(1) A car or van is not treated as a facility for the purposes of section 281(1) if in the tax year in which it is provided it is also made available--

(a) to the employee or members of the employee's family or household for private use not falling within section 281(1),

(b) by reason of the employee's employment, and

(2) The following sections apply for the purposes of this section as they apply for the purposes of Chapter 6 of Part 3 (taxable benefits: cars, vans and related benefits)--

(a) section 115 (meaning of "car" and "van"),

(b) section 117 (meaning of car or van made available by reason of employment), and

284 Bridging loan expenses

(1) Expenses are within this section if--

(a) the employee has an interest in the former residence and disposes of it because of the change of residence,

(b) the employee acquires an interest in the new residence, and

(c) the expenses are interest payable by the employee in respect of a loan raised by the employee wholly or partly because expenditure is incurred in connection with that acquisition before the proceeds of that disposal become available.

This is subject to subsections (2) and (3).

(2) Interest is only within this section if or to the extent that the loan is used--

(a) for acquiring the employee's interest in the new residence, or

(b) for redeeming a loan--

(i) which was raised by the employee to obtain an interest in the former residence,

(ii) which is secured on such an interest, or

(iii) which was partly so raised and the rest of which is so secured.

(3) If the loan exceeds the market value of the employee's interest in the former residence at the time of acquisition of the new residence, the interest on the excess is not within this section.

(4) If subsection (3) applies in a case where the loan is used partly for purposes within subsection (2) and partly for other purposes, the amount of the interest within this section is the appropriate fraction of the total interest.

(5) The appropriate fraction is--

---

or, if it is smaller--

---

where--

MV is the market value of the employee's interest in the former residence at the time of acquisition of the new residence,
PL is the part of the loan used for purposes within subsection (2), and
L is the amount of the loan.

(6) In this section--

(a) references to a loan raised by the employee include a loan raised by--

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

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

(b) references to the employee having, disposing of or acquiring an interest in a residence include--

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

(ii) the employee and one or more members of the employee's family or household having, disposing of or acquiring such an interest.

285 Replacement of domestic goods

(1) Benefits and expenses are within this section if--

(a) the employee has an interest in the former residence and disposes of it because of the change of residence,

(b) the employee acquires an interest in the new residence,

(c) in the case of benefits, they are domestic goods provided to replace goods used at the former residence which are unsuitable for use at the new residence, and

(d) in the case of expenses, they are incurred on the purchase of domestic goods intended for such replacement.

(2) In this section references to the employee having, disposing of or acquiring an interest in a residence include--

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

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

286 Power to amend sections 279 to 285

(1) The Treasury may by regulations amend sections 279 to 285 so as to secure that benefits or expenses which would not otherwise fall within any of those sections do so.

(2) The regulations may include such supplementary, incidental or consequential provisions as appear to the Treasury to be necessary or expedient.

(3) Those provisions may be made by amending this Chapter or otherwise.

(4) The regulations apply to a change of an employee's residence resulting from an employment change occurring on or after the day specified in the regulations for this purpose.

Limit on exemption

287 Limit on exemption

(1) If in the case of any change of residence the value of the exemption exceeds £8,000, section 271 (exemption of removal benefits and expenses) does not apply to the excess.

(2) The value of the exemption is an amount equal to the sum of--

(a) the section 62 earnings, and

(b) the benefits code earnings (after taking account of section 64(2)(b) where otherwise an amount that falls within paragraph (a) would be included).

(3) In this section "the section 62 earnings" means all earnings within section 62 (earnings) in respect of which section 271 would prevent liability to income tax from arising if this section were disregarded.

(4) In this section "the benefits code earnings" means all earnings--

(a) which are treated as such under the benefits code (except earnings so treated under Chapter 7 of Part 3 (taxable benefits: loans)), and

(b) in respect of which section 271 would prevent liability to income tax from arising if this section were disregarded.

(5) In the case of living accommodation, the amount that would be so treated is to be taken to be equal to--

CE - D

where--

CE is the cash equivalent of the accommodation under Chapter 5 of Part 3 (taxable benefits: living accommodation) for the period in which the accommodation is provided (calculated as mentioned in section 103), and
D is any amount deductible under section 364 (deductions where living accommodation provided).

Special exemption and relief for bridging loans

288 Limited exemption of certain bridging loans connected with employment moves

(1) No liability to income tax arises by virtue of Chapter 7 of Part 3 (taxable benefits: loans) in respect of a loan if--

(a) it is a removal benefit (see subsection (2)),

(b) the unused removal benefit exemption condition is met (see subsection (3)), and

(2) For the purposes of this section and section 289, a loan is a removal benefit if--

(a) it is raised by the employee in connection with a change of residence meeting the conditions in section 273 (conditions applicable to change of residence),

(b) the employee has an interest in the former residence and disposes of it in consequence of the change of residence,

(d) the loan is raised wholly or partly because expenditure is incurred in connection with that acquisition before the proceeds of that disposal become available, and

(e) the loan is made before the limitation day.

(3) For the purposes of this section and section 289 the unused removal benefit exemption condition is that, in the case of the particular change of residence--

(a) the sum specified in section 287(1) (limit on exemption), exceeds

(b) the amount referred to in section 287(2) (the value of the exemption);

and for those purposes that excess is "the unused exemption".

(4) In this section and section 289 "the exempted loan discharge period", in relation to a loan, means the period of N days beginning with the day on which it is made, taking N as the number obtained by applying the following formula and, if that does not give a whole number, rounding up the result to the nearest whole number--

---

where--

A is the unused exemption,
B is the maximum amount of the loan outstanding in the period beginning with the time when the loan is made and ending with the limitation day, and
C is the official rate of interest in force when the loan is made (expressed as a percentage).

(5) In this section--

(a) references to a loan raised by the employee include a loan raised by--

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

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

(b) references to the employee having, disposing of or acquiring an interest in a residence include--

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

(ii) the employee and one or more members of the employee's family or household having, disposing of or acquiring such an interest.

(6) The tax payable in respect of a loan for a tax year ending before the limitation day may be decided on the basis that the unused removal benefit exemption condition will not be met.

289 Relief for certain bridging loans not qualifying for exemption under section 288

(1) This subsection applies to a loan if--

(a) it is a removal benefit (see section 288(2)),

(b) the unused removal benefit exemption condition is met (see section 288(3)), and

(2) A loan to which subsection (1) applies is to be treated for the purposes of Chapter 7 of Part 3 (taxable benefits: loans) as if it was made on the day after the last day of the exempted loan discharge period.

(3) Subsection (2) does not apply for the purposes of sections 176, 177, 180, 189 and 190.

(4) The tax payable in respect of a loan for a tax year ending before the limitation day may be decided on the basis that subsections (1) and (2) will not apply because the unused removal benefit exemption condition will not be met.

Chapter 8 Exemptions: special kinds of employees

Ministers of religion

290 Accommodation benefits of ministers of religion

(1) No liability to income tax in respect of a person employed as a full-time minister arises by virtue of--

(a) the payment or reimbursement of a statutory amount payable in connection with qualifying premises, or

(b) the reimbursement of a statutory deduction made in connection with qualifying premises.

(2) No liability to income tax in respect of a person employed as a full-time minister arises by virtue of the payment or reimbursement of expenses incurred in connection with providing living accommodation in qualifying premises if the employment is excluded employment.

(3) Subsection (1) does not apply if or to the extent that the amount or deduction is properly attributable to a part of the premises for which the minister receives rent.

(4) Premises are qualifying premises in relation to a person employed as a minister if--

(a) an interest in them belongs to a charity or an ecclesiastical corporation, and

(b) because of that interest and by reason of holding the employment, the minister has a residence in them from which to perform the duties of the employment.

(5) In this section--

"charity" means a body of persons or trust established for charitable purposes only,
"full-time minister" means a person in full-time employment as a minister of a religious denomination,
"statutory amount" means an amount paid in pursuance of a provision in, or having the force of, an Act, and
"statutory deduction" means a deduction made in pursuance of such a provision.

MPs, government ministers etc.

291 Termination payments to MPs and others ceasing to hold office

(1) No liability to income tax in respect of earnings arises by virtue of any grant or payment to which this section applies (but see Chapter 3 of Part 6: payments and benefits on termination of employment etc.).

(2) This section applies to grants and payments--

(a) made in accordance with a resolution of the House of Commons to a person ceasing to be a Member of that House on a dissolution of Parliament,

(b) made under section 4 of the Ministerial and other Pensions and Salaries Act 1991 (c. 5) (grants to persons ceasing to hold certain ministerial and other offices),

(c) made under section 3 of the European Parliament (Pay and Pensions) Act 1979 (c. 50) (resettlement grants for persons ceasing to be Representatives),

(d) made under section 81(3) of the Scotland Act 1998 (c. 46) to a person--

(i) ceasing to be a member of the Scottish Parliament on its dissolution, or

(ii) ceasing to hold an office corresponding to a relevant office,

(e) made under section 18(1) of the Government of Wales Act 1998 (c. 38) to a person ceasing to be a member of the National Assembly for Wales on the expiry of the member's term of office, or

(f) made under section 48(1) of the Northern Ireland Act 1998 (c. 47) to a person--

(i) ceasing to be a member of the Northern Ireland Assembly on its dissolution, or

(ii) ceasing to hold an office corresponding to a relevant office.

(3) In this section "a relevant office" has the same meaning as in section 4 of the Ministerial and other Pensions and Salaries Act 1991.

292 Overnight expenses allowances of MPs

(1) No liability to income tax arises in respect of an overnight expenses allowance paid to a Member of the House of Commons in accordance with a resolution of that House.

(2) "Overnight expenses allowance" means an allowance expressed to be in respect of additional expenses necessarily incurred by the Member in staying overnight away from the Member's only or main residence, for the purpose of performing parliamentary duties--

(a) in the London area, as defined in such a resolution, or

(b) in the Member's constituency.

293 Overnight expenses of other elected representatives

(1) No liability to income tax arises in respect of a payment to which this section applies if it is expressed to be made in respect of a member's necessary overnight expenses.

(2) This section applies to payments--

(a) made to members of the Scottish Parliament under section 81(2) of the Scotland Act 1998 (c. 46),

(b) made to members of the National Assembly for Wales under section 16(2) of the Government of Wales Act 1998 (c. 38), or

(3) In this section "a member's necessary overnight expenses" means additional expenses necessarily incurred by a member for the purpose of performing duties as a member in staying overnight away from the member's only or main residence--

(a) in the area in which the Parliament or Assembly to which the member belongs sits, or

(b) in the constituency or region which the member represents.

294 EU travel expenses of MPs and other representatives

(1) No liability to income tax arises in respect of a sum that is--

(a) paid to a Member of the House of Commons in accordance with a resolution of that House providing for Members of that House to be reimbursed EU travel expenses, or

(b) paid to a member of--

(i) the Scottish Parliament under section 81(2) of the Scotland Act 1998,

(ii) the National Assembly for Wales under section 16(2) of the Government of Wales Act 1998, or

(iii) the Northern Ireland Assembly under section 47(2) of the Northern Ireland Act 1998,

and expressed to be made in respect of EU travel expenses.

(2) "EU travel expenses" means the cost of, and any additional expenses incurred in, travelling between the United Kingdom and--

(a) a European Union institution in Brussels, Luxembourg or Strasbourg, or

(b) the national parliament of another member State or of a candidate country.

(3) In subsection (2) "candidate country" means Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, the Slovak Republic, Slovenia or Turkey.

(4) The Treasury shall by order make such amendments of the definition in subsection (3) as are necessary to secure that the countries listed are those that are from time to time candidates for membership of the European Union.

295 Transport and subsistence for Government ministers etc.

(1) No liability to income tax arises in respect of the provision of transport or subsistence provided or made available by or on behalf of the Crown to--

(a) the holder of a ministerial office, or

(b) a member of the family or household of the holder of a ministerial office.

(2) No liability to income tax arises in respect of payments and reimbursements by or on behalf of the Crown of expenses incurred in connection with the provision of transport or subsistence to a person within subsection (1).

(3) "Ministerial office" means--

(a) an office in Her Majesty's Government in the United Kingdom,

(b) any other office which is one of the offices and positions in respect of which salaries are payable under section 1 of the Ministerial and other Salaries Act 1975 (c. 27), and

(i) the Scotland Act 1998 (c. 46),

(ii) the Government of Wales Act 1998 (c. 38), or

(iii) the Northern Ireland Act 1998 (c. 47).

(4) In determining whether a particular person holds an office within subsection (3)(b), it is irrelevant whether or not a salary is paid or payable to that person under the Ministerial and other Salaries Act 1975.

(5) In this section references to the provision of transport to a person include references to--

(a) the provision or making available to that person of a vehicle with or without a driver,

(b) the provision of fuel for a vehicle provided or made available to that person, and

(6) In this section--

(a) "subsistence" includes food and drink and temporary living accommodation, and

(b) "vehicle" means a mechanically propelled road vehicle.

Armed forces

296 Armed forces' leave travel facilities

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

(a) the provision of travel facilities for a member of the armed forces of the Crown going on or returning from leave, or

(b) a payment made in respect of such travel.

(2) In subsection (1) "travel facilities" does not include a vehicle.

297 Armed forces' food, drink and mess allowances

(1) No liability to income tax arises in respect of allowances if--

(a) they are payable out of the public revenue to any description of members of the armed forces of the Crown, and

(b) the Treasury certifies that they are payable to them instead of food or drink normally supplied to members of the armed forces.

(2) No liability to income tax arises in respect of allowances if--

(a) they are payable out of the public revenue in respect of any description of members of the armed forces of the Crown, and

(b) the Treasury certifies that they are so payable as a contribution to the expenses of a mess.

298 Reserve and auxiliary forces' training allowances

No liability to income tax arises in respect of the following sums if they are payable out of the public revenue to members of the reserve and auxiliary forces of the Crown--

(a) training expenses allowances, and

(b) bounties payable in consideration of the members undertaking certain training and attaining a particular standard of efficiency.

Crown employees

299 Crown employees' foreign service allowances

(1) No liability to income tax arises in respect of an allowance paid to a person in employment under the Crown if it is certified to represent compensation for the extra cost of being obliged to live outside the United Kingdom in order to perform the duties of the employment.

(2) A certificate under subsection (1) may only be given by--

(a) the Treasury,

(b) the Secretary of State,

(d) the Chancellor of the Exchequer,

(e) the Minister for the Civil Service,

(f) the Lord President of the Council,

(g) the Lord Privy Seal, or

(h) the Attorney General.

Consuls, foreign agents etc.

300 Consuls

(1) No liability to income tax arises in respect of income arising from the office of a consul in the United Kingdom in the service of a foreign state.

(2) Such income is also to be disregarded in estimating the amount of income for any income tax purposes.

(3) In this section "consul" means a person recognised by Her Majesty as being a consul-general, consul, vice-consul or consular agent.

301 Official agents

(1) No liability to income tax arises in respect of income arising from employment as an official agent in the United Kingdom for a foreign state if conditions A and B are met.

(2) Condition A is that the employee is neither--

(a) a Commonwealth citizen, nor

(b) a citizen of the Republic of Ireland.

(3) Condition B is that the functions of the employment are not exercised in connection with a trade, business or other undertaking carried on for the purposes of profit.

(4) Such income is also to be disregarded in estimating the amount of income for any income tax purposes.

(5) In this section "official agent" means a person who is not a consul (as defined in section 300) but is employed on the staff of--

(a) a consulate, or

(b) an official department or agency of a foreign state.

(6) Subsection (5)(b) does not apply to a department or agency which carries on a trade, business or other undertaking for the purposes of profit.

302 Consular employees

(1) No liability to income tax arises in respect of income arising from employment in the United Kingdom as a consular employee for a foreign state if--

(a) Her Majesty by Order in Council directs that this section applies to the foreign state for the purpose of giving effect to a reciprocal arrangement with that state, and

(b) condition A or B is met.

(2) Condition A is that the employee is a national of the foreign state.

-- Back --

Stat