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

(The document as of February, 2008)

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Identify the van or vans involved in the calculation. They are--

(a)

the shared van, and

(b)

where that van is made available by the employer, any other vans made available (whether or not to the employee or a member of the employee's family or household) by the same employer which are shared vans for the whole or any part of the tax year in question.

Step 2

Determine whether the employee is a participating employee within the meaning of section 162.

If the employee is not, then the value of shared availability is nil.

Step 3

Determine the total number of participating employees within the meaning of section 162.

Step 4

Find the basic value of the van for the year under section 163 or, where more than one van is involved, the basic value of each of those vans for the year under that section.

Step 5

Calculate the reckonable amount which is given by the formula--

---

where--

BV is the basic value of the van or, where more than one van is involved, the total of the basic values of each of those vans, and
PE is the total number of participating employees.

Step 6

If the reckonable amount exceeds £500, the provisional sum is £500.

In any other case, the provisional sum is the reckonable amount.

Step 7

Make any deduction from the provisional sum under section 165 in respect of payments by the employee for the private use of the van or vans involved.

The result is the value of shared availability.

(2) The calculation is made under this section in relation to a participating employee regardless of--

(a) the number of vans involved which are available to the particular employee,

(b) the fact that a particular van involved is or is not available to, or used by, the employee, or

162 Shared van: meaning of "participating employee"

(1) If only one van is involved, an employee is a participating employee for the purposes of section 161 if--

(a) the van is available to the employee for the employee's private use while it is a shared van, and

(b) the employee makes private use of it at least once while it is a shared van.

(2) If more than one van is involved, an employee is a participating employee for the purposes of section 161 if--

(a) one of the vans is available to the employee for the employee's private use while it is a shared van, or

(b) some or all of the vans are available to the employee for the employee's private use while they are shared vans,

and the employee makes private use of at least one of the vans involved while it is a shared van.

(3) In this section--

(a) any reference to a van being available for an employee's private use includes a reference to the van being available for the private use of a member of the employee's family or household, and

(b) any reference to an employee making private use of a van includes a reference to a member of the employee's family or household making private use of it.

163 Shared van: basic value

(1) The basic value of a shared van is calculated as follows--

Step 1

Determine the age of the van.

Step 2

If the age of the van is less than 4 years at the end of the tax year in question, the interim value of the van is £500.

In any other case, the interim value of the van is £350.

Step 3

Make a deduction from the interim value if there are any excluded days during the tax year in question.

The amount of the deduction is given by the formula--

---

where--

E is the number of excluded days in the year,
Y is the number of days in the year, and
IV is the interim value of the van.
The result is the basic value of the van for the year.

(2) In this section an "excluded day" means a day on which--

(a) the van is not a shared van, or

(b) the van is incapable of use.

(3) For the purposes of this section a van is to be treated as incapable of use on any day if the day falls within a period of 30 days or more throughout which the van is incapable of being used at all.

164 Value of shared availability: alternative calculation

(1) This section applies if the employee makes a claim for this section to apply instead of section 161.

(2) The value of shared availability is calculated as follows--

Step 1

Identify the van or vans involved in the calculation. They are--

(a)

the shared van, and

(b)

where that van is made available by the employer, any other vans made available by the same employer to the employee or a member of the employee's family or household which are shared vans for the whole or any part of the tax year in question.

Step 2

Determine the number of relevant days for the van, or where more than one van is involved, for each of those vans.

Step 3

Calculate the provisional sum which is given by the formula--

RD × £5

where RD is the number of relevant days for the van or, where more than one van is involved, the total of the number of relevant days for each of those vans.

Step 4

Make any deduction from the provisional sum under section 165 in respect of payments by the employee for the private use of the van or vans involved.

The result is the value of shared availability.

(3) For the purposes of this section a relevant day is a day--

(a) which falls in the tax year in question, and

(b) during which (or during part of which) the employee or a member of the employee's family or household makes private use of the van concerned while it is a shared van.

(4) For the purposes of section 95 of TMA 1970 (incorrect return etc.) a claim under this section is to be treated as a claim for relief.

165 Deduction for payments for private use

(1) A deduction is to be made from the provisional sum calculated under step 6 of section 161(1) or step 3 of section 164(2) if, as a condition of the van or vans involved being available for the employee's private use, the employee--

(a) is required in the tax year in question to pay (whether by way of deduction from earnings or otherwise) an amount of money for that use, and

(b) makes such payment.

(2) If the relevant sum in respect of that year is equal to or exceeds the provisional sum, the provisional sum is reduced so that the value of shared availability is nil.

(3) In any other case the relevant sum in respect of the year is deducted from the provisional sum in order to give the value of shared availability.

(4) The relevant sum is found by--

(a) taking for any van involved the amount paid by the employee as a condition of it being available for the employee's private use in respect of the period when it is a shared van in the year concerned, and

(b) where more than one van is involved, adding together all the amounts found under paragraph (a).

(5) In this section any reference to a van being available for the employee's private use includes a reference to the van being available for the private use of a member of the employee's family or household.

Vans: limit of cash equivalent

166 Vans: limit of cash equivalent

If--

(a) the cash equivalent of the benefit of vans to an employee for a tax year would (apart from this section) total more than £500, and

(b) no more than one of the vans is available to the employee for the employee's private use, or the private use of a member of the employee's family or household, at any one time in the year,

the cash equivalent of the benefit of the vans to the employee for the year is to be £500.

Cars and vans: exceptions

167 Pooled cars

(1) This section applies to a car in relation to a particular tax year if for that year the car has been included in a car pool for the use of the employees of one or more employers.

(2) For that tax year the car--

(a) is to be treated under section 114(1) (cars to which this Chapter applies) as not having been available for the private use of any of the employees concerned, and

(b) is not to be treated in relation to the employees concerned as an employment-related benefit within the meaning of Chapter 10 of this Part (taxable benefits: residual liability to charge) (see section 201).

(3) In relation to a particular tax year, a car is included in a car pool for the use of the employees of one or more employers if in that year--

(a) the car was made available to, and actually used by, more than one of those employees,

(b) the car was made available, in the case of each of those employees, by reason of the employee's employment,

(d) in the case of each of those employees, any private use of the car made by the employee was merely incidental to the employee's other use of the car in that year, and

(e) the car was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on premises occupied by the person making the car available to them.

168 Pooled vans

(1) This section applies to a van in relation to a particular tax year if for that year the van has been included in a van pool for the use of the employees of one or more employers.

(2) For that tax year the van--

(a) is to be treated under section 114(1) (vans to which this Chapter applies) as not having been available for the private use of any of the employees concerned, and

(3) In relation to a particular tax year, a van is included in a van pool for the use of the employees of one or more employers if in that year--

(a) the van was made available to, and actually used by, more than one of those employees,

(b) the van was made available, in the case of each of those employees, by reason of the employee's employment,

(d) in the case of each of those employees, any private use of the van made by the employee was merely incidental to the employee's other use of the van in that year, and

(e) the van was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on premises occupied by the person making the van available to them.

169 Car available to more than one member of family or household employed by same employer

(1) This section applies where--

(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 car being made available to M in a tax year, E would (apart from this section) be chargeable to tax in respect of the car in that year by virtue of section 120.

(2) The cash equivalent of the benefit of the car and of any fuel provided for the car 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 car in that year by virtue of section 120, or

(b) where M's employment is an excluded employment, M had the benefit of the car in M's own right as an employee and condition A or B is met.

(3) Condition A is met if equivalent cars are made available on the same terms to employees who--

(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 car is in accordance with the normal commercial practice for an employment of the kind held by M.

Orders

170 Orders etc. relating to this Chapter

(1) The Treasury may by order substitute a greater amount for that for the time being specified in--

(a) step 4 of section 121(1) (car: maximum interim sum),

(b) section 126(3)(d) (car: minimum price of later accessory),

(d) section 147(1)(b) (classic car: minimum value), or

(e) section 147(7)(b) (classic car: maximum contributions deduction).

(2) An order under subsection (1) must specify the tax years to which it applies.

(3) The Treasury may by order provide for a "lower threshold" different from that specified in the Table in section 139(4) (car with a CO₂ emissions figure) to apply for tax years beginning on or after 6th April 2005 or such later date as may be specified in the order.

(4) The Treasury may by regulations provide for the value of the appropriate percentage as determined under sections 139 to 141 to be reduced--

(a) by such amount,

(b) in such circumstances, and

as may be prescribed in the regulations.

(5) The Treasury may by order substitute a different amount for that specified in section 150(1) (car fuel: cash equivalent).

(6) An order under subsection (5) must specify the tax years to which it applies, being tax years beginning after that in which it is made.

Supplementary

171 Minor definitions: general

(1) In this Chapter--

"business travel", in relation to any employee, means travelling the expenses of which, if incurred and paid by the employee, would (if Chapter 2 of Part 4 did not apply) be deductible under sections 337 to 342, section 353 or under Chapter 5 of Part 5 (other than section 377);
"diesel" means any diesel fuel within the definition in Article 2 of Directive 98/70/EC of the European Parliament and of the Council;
"EC certificate of conformity" means a certificate of conformity issued by a manufacturer under any provision of the law of a Member State implementing Article 6 of Council Directive 70/156/EEC, as amended;
"EC type-approval certificate" means a type-approval certificate issued under any provision of the law of a Member State implementing Council Directive 70/156/EEC, as amended;
"relevant taxes" means any car tax, any value added tax, any customs or excise duty and any tax chargeable as if it were a customs duty;
"road fuel gas" means any substance which is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and which is for use as fuel in road vehicles;
"UK approval certificate" means a certificate issued under--
(a)
section 58(1) or (4) of the Road Traffic Act 1988 (c. 52), or
(b)
Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1)).

(2) In this Chapter references to the date of first registration in relation to a car or van are to the date on which the vehicle was first registered under VERA 1994 or under corresponding legislation of any country or territory.

(3) In this Chapter references to the age of a car or a van at any time are to the interval between the date of first registration of the vehicle and that time.

(4) In this Chapter "disabled person's badge" means a badge--

(a) which is issued to a disabled person under section 21 of the Chronically Sick and Disabled Persons Act 1970 (c. 44) or section 14 of the Chronically Sick and Disabled Persons (Northern Ireland) Act 1978 (c. 53), or has effect as if it had been issued under one of those provisions, and

(b) which is not required to be returned to the issuing authority under or by virtue of the provision referred to in paragraph (a).

172 Minor definitions: equipment to enable a disabled person to use a car

(1) In section 125(2)(c) "equipment to enable a disabled person to use a car" means equipment--

(a) which is designed solely for use by a chronically sick or disabled person, or

(b) which is made available for use with the car because it enables a disabled employee to use the car in spite of the disability.

(2) In this section--

"disabled employee" means an employee who, at the time when the car is first made available to the employee, holds a disabled person's badge, and
"the disability" means the disability entitling the disabled employee to hold the disabled person's badge.

Chapter 7 Taxable benefits: loans

Introduction

173 Loans to which this Chapter applies

(1) This Chapter applies to a loan if it is an employment-related loan.

(2) In this Chapter--

(a) "loan" includes any form of credit, and

(b) references to making a loan (and related expressions) include arranging, guaranteeing or in any way facilitating a loan.

(3) Sections 288 and 289 make provision for exemption and relief for certain bridging loans connected with employment moves.

174 Employment-related loans

(1) For the purposes of this Chapter an employment-related loan is a loan--

(a) made to an employee or a relative of an employee, and

(b) of a class described in subsection (2).

(2) For the purposes of this Chapter the classes of employment-related loan are--

A loan made by the employee's employer.

A loan made by a company or partnership over which the employee's employer had control.

A loan made by a company or partnership by which the employer (being a company or partnership) was controlled.

A loan made by a company or partnership which was controlled by a person by whom the employer (being a company or partnership) was controlled.

A loan made by a person having a material interest in--

(a) a close company which was the employer, had control over the employer or was controlled by the employer, or

(b) a company or partnership controlling that close company.

(3) In this section--

"employee" includes a prospective employee, and
"employer" includes a prospective employer.

(4) References in this section to a loan being made by a person extend to a person who--

(a) assumes the rights and liabilities of the person who originally made the loan, or

(b) arranges, guarantees or in any way facilitates the continuation of a loan already in existence.

(5) A loan is not an employment-related loan if--

(a) it is made by an individual in the normal course of the individual's domestic, family or personal relationships, or

(b) it is made to a relative of the employee and the employee derives no benefit from it.

(6) For the purposes of this section a person ("X") is a relative of another ("Y") if X is--

(a) Y's spouse,

(b) a parent, child or remoter relation in the direct line either of Y or of Y's spouse,

(d) the spouse of a person falling within paragraph (b) or (c).

Benefit of taxable cheap loan treated as earnings

175 Benefit of taxable cheap loan treated as earnings

(1) The cash equivalent of the benefit of an employment-related loan is to be treated as earnings from the employee's employment for a tax year if the loan is a taxable cheap loan in relation to that year.

(2) For the purposes of this Chapter an employment-related loan is a "taxable cheap loan" in relation to a particular tax year if--

(a) there is a period consisting of the whole or part of that year during which the loan is outstanding and the employee holds the employment,

(b) no interest is paid on it for that year, or the amount of interest paid on it for that year is less than the interest that would have been payable at the official rate, and

(3) The cash equivalent of the benefit of an employment-related loan for a tax year is the difference between--

(a) the amount of interest that would have been payable on the loan for that year at the official rate, and

(b) the amount of interest (if any) actually paid on the loan for that year.

(4) If there are two or more employment-related loans, this section applies to each separately.

(5) This section is subject to--

section 180 (threshold for benefit of loan to be treated as earnings);
section 186 (replacement loans).

176 Exception for loans on ordinary commercial terms

(1) A loan on ordinary commercial terms is not a taxable cheap loan.

(2) In this section a "loan on ordinary commercial terms" means a loan--

(a) made by a person ("the lender") in the ordinary course of a business carried on by the lender which includes--

(i) the lending of money, or

(ii) the supplying of goods or services on credit, and

(b) in relation to which condition A, B or C is met.

(3) Condition A is met if--

(a) at the time the loan was made comparable loans were available to all those who might be expected to avail themselves of the services provided by the lender in the course of the lender's business,

(b) a substantial proportion of the loans (consisting of the loan in question and the comparable loans) made by the lender at or about the time the loan in question was made were made to members of the public,

(c) the loan in question is held on the same terms as comparable loans generally made by the lender to members of the public at or about the time the loan in question was made, and

(d) where those terms differ from the terms applicable immediately after the loan in question was first made, they were imposed in the ordinary course of the lender's business.

(4) For the purposes of condition A a loan is comparable to another loan if it is made for the same or similar purposes and on the same terms and conditions.

(5) Condition B is met if--

(a) the loan has been varied before 6th April 2000,

(b) a substantial proportion of the relevant loans were made to members of the public,

(c) the loan in question is held on the same terms as relevant loans generally made by the lender to members of the public at or about the relevant time, and

(d) where those terms differ from the terms applicable immediately after the relevant time, they were imposed in the ordinary course of the lender's business.

(6) Condition C is met if--

(a) the loan has been varied on or after 6th April 2000,

(b) a substantial proportion of the relevant loans were made to members of the public,

(c) at the relevant time members of the public who had loans from the lender for similar purposes had a right to vary their loans on the same terms and conditions as applied in relation to the variation of the loan in question,

(d) the loan in question as varied is held on the same terms as any existing loans so varied, and

(e) where those terms differ from the terms applicable immediately after the relevant time, they were imposed in the ordinary course of the lender's business.

(7) For the purposes of condition B and C--

(a) the "relevant time" is the time of the variation of the loan in question, and

(b) the "relevant loans" are--

(i) the loan in question,

(ii) any existing loans which were varied at or about the relevant time so as to be held on the same terms as the loan in question after it was varied, and

(iii) any new loans which were made by the lender at or about that time and are held on those terms.

(8) No account is to be taken of amounts which are incurred on fees, commission or other incidental expenses by the person to whom a loan is made for the purpose of obtaining the loan--

(a) in determining for the purposes of condition A whether loans made by a lender before 1st June 1994 are made or held on the same terms or conditions, or

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