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Income Tax (Earnings and Pensions) Act 2003

Type Public General Act

Publication 2003-03-06

Last updated 2026-03-15

State In force

Department Statute Law Database

Source legislation.gov.uk

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(a) the employer is an individual, and

(b) the provision is made in the normal course of the employer’s domestic, family or personal relationships.

(3) 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,

is to be treated for the purposes of this Chapter as having been received by the employee at the time when it is appropriated.

Provision for, or receipt by, member of employee’s family

74

For the purposes of this Chapter any reference to a cash voucher being provided for or received by an employee includes a reference to it being provided for or received by a member of the employee’s family.

Meaning of “cash voucher”

75

(1) In this Chapter “cash voucher” means a voucher, stamp or similar document capable of being exchanged for a sum of money which is—

(a) greater than,

(b) equal to, or

the expense incurred by the person at whose cost the voucher, stamp or similar document is provided.

(2) For the purposes of subsection (1) it does not matter whether the document—

(a) is also capable of being exchanged for goods or services;

(b) is capable of being exchanged singly or together with other vouchers, stamps, or documents;

(3) Subsection (1) is subject to section 76 (sickness benefits-related voucher).

76

(1) This section applies where—

(a) the expense incurred by the person at whose cost a voucher, stamp or similar document is provided (“the provision expense”) includes costs to that person of providing sickness benefits (“sickness benefits costs”),

(b) the voucher, stamp or document would be a cash voucher (apart from this section) but for the fact that the sum of money for which it is capable of being exchanged (“the exchange sum”) is substantially less than the provision expense, and

(c) the whole or part of the difference between the exchange sum and the provision expense represents the sickness benefits costs.

(2) The voucher, stamp or document is a cash voucher within the meaning of this Chapter if—

$E=PE-D$

$$EisnotsubstantiallylessthanPE-D$where—E is the exchange sum,PE is the provision expense, andD is the amount of the difference between E and PE which represents the sickness benefits costs.$

(3) In this section “sickness benefits” mean benefits in connection with sickness, personal injury or death.

Apportionment of cost of provision of voucher

77

If a person incurs expense in or in connection with the provision of vouchers, stamps or similar documents for two or more employees as members of a group or class, the expense incurred in respect of one of them is to be such part of that expense as is just and reasonable.

Cash vouchers: exceptions

Voucher made available to public generally

78

This Chapter does not apply to a cash voucher if—

(a) it is of a kind made available to the public generally, and

(b) it is provided to the employee or a member of the employee’s family on no more favourable terms than to the public generally.

Voucher issued under approved scheme

79

(1) This Chapter does not apply to a cash voucher received by an employee if—

(a) it is issued under a scheme, and

(b) at the time when it is received the scheme is a scheme approved by an officer of Revenue and Customs for the purposes of this section.

(2) An officer of Revenue and Customs must not approve a scheme for the purposes of this section unless the officer is satisfied that it is practicable for income tax in respect of all payments made in exchange for vouchers issued under the scheme to be deducted in accordance with PAYE regulations.

Vouchers where payment of sums exempt from tax

80

This Chapter does not apply to a cash voucher if it is—

(a) a document intended to enable a person to obtain payment of a sum which would not have constituted employment income if paid to the person directly, or

(b) a savings certificate where the accumulated interest payable in respect of it is exempt from tax (or would be so exempt if certain conditions were met).

Benefit of cash voucher treated as earnings

81

(1) The cash equivalent of the benefit of a cash voucher to which this Chapter applies is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.

(1A) Where a cash voucher to which this Chapter applies is provided pursuant to optional remuneration arrangements—

(a) subsection (1) does not apply, and

(b) the relevant amount is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.

(1B) In this section “the relevant amount” means—

(a) the cash equivalent, or

(b) if greater, the amount foregone with respect to the benefit of the voucher (see section 69B).

(2) The cash equivalent is the sum of money for which the voucher is capable of being exchanged.

(3) For the purposes of subsection (1B), assume that the cash equivalent is zero if the condition in subsection (4) is met.

(4) The condition is that the benefit of the voucher would be exempt from income tax but for section 228A (exclusion of certain exemptions).

Non-cash vouchers: introduction

Non-cash vouchers to which this Chapter applies

82

(1) This Chapter applies to a non-cash voucher provided for an employee by reason of the employment which is received by the employee.

(2) A non-cash voucher provided for an employee by the employer is to be regarded as provided by reason of the employment unless—

(a) the employer is an individual, and

(b) the provision is made in the normal course of the employer’s domestic, family or personal relationships.

(3) 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 Chapter as having been received by the employee at the time when it is appropriated.

Provision for, or receipt by, member of employee’s family

83

For the purposes of this Chapter any reference to a non-cash voucher being provided for or received by an employee includes a reference to it being provided for or received by a member of the employee’s family.

Meaning of “non-cash voucher”

84

(1) In this Chapter “non-cash voucher” means—

(a) a voucher, stamp or similar document or token which is capable of being exchanged for money, goods or services,

(ab) a childcare voucher,

(b) a transport voucher, or

but does not include a cash voucher.

(2) For the purposes of subsection (1)(a) it does not matter whether the document or token is capable of being exchanged—

(a) singly or together with other vouchers, stamps, documents or tokens;

(b) immediately or only after a time.

(2A) In this Chapter “childcare voucher” means a voucher, stamp or similar document or token intended to enable a person to obtain the provision of care for a child (whether or not in exchange for it).

(3) In this Chapter “transport voucher” means a ticket, pass or other document or token intended to enable a person to obtain passenger transport services (whether or not in exchange for it).

(4) In this Chapter “cheque voucher” means a cheque—

(a) provided for an employee, and

(b) intended for use by the employee wholly or mainly for payment for—

(i) particular goods or services, or

(ii) goods or services of one or more particular classes;

and, in relation to a cheque voucher, references to a voucher being exchanged for goods or services are to be read accordingly.

Non-cash voucher: exceptions

Non-cash voucher made available to public generally

85

This Chapter does not apply to a non-cash voucher if—

(a) it is of a kind made available to the public generally, and

(b) it is provided to the employee or a member of the employee’s family on no more favourable terms than to the public generally.

Transport vouchers under pre-26th March 1982 arrangements

86

(1) This Chapter does not apply to a transport voucher provided for an employee of a passenger transport undertaking under arrangements in operation on 25th March 1982 which meet the condition in subsection (2).

(2) The condition is that the arrangements are intended to enable the employee or a member of the employee’s family to obtain passenger transport services provided by—

(a) the employer,

(b) a subsidiary of the employer,

(d) another passenger transport undertaking.

(3) In this section—

“passenger transport undertaking” means an undertaking whose business consists wholly or mainly in the carriage of passengers or a subsidiary of such an undertaking, and

“subsidiary” means a wholly-owned subsidiary within the meaning of section 1159 of and Schedule 6 to the Companies Act 2006.

Benefit of non-cash voucher treated as earnings

87

(1) The cash equivalent of the benefit of a non-cash voucher to which this Chapter applies is to be treated as earnings from the employment for the tax year in which the voucher is received by the employee.

(2) The cash equivalent is the difference between—

(a) the cost of provision, and

(b) any part of that cost made good by the employee , to the person incurring it, on or before 6 July following the relevant tax year.

(2A) If the voucher is a non-cash voucher other than a cheque voucher, the relevant tax year is—

(a) the tax year in which the cost of provision is incurred, or

(b) if later, the tax year in which the employee receives the voucher.

(2B) If the voucher is a cheque voucher, the relevant tax year is the tax year in which the voucher is handed over in exchange for money, goods or services.

(3) In this Chapter the “cost of provision” means, in relation to a non-cash voucher, the expense incurred in or in connection with the provision of—

(a) the voucher, and

(b) the money, goods or services for which it is capable of being exchanged,

by the person at whose cost they are provided.

(3A) In the case of a childcare voucher, the reference in subsection (3)(b) to the services for which the voucher is capable of being exchanged is to the provision of care for a child which may be obtained by using it.

(4) In the case of a transport voucher, the reference in subsection (3)(b) to the services for which the voucher is capable of being exchanged is to the passenger transport services which may be obtained by using it.

(5) If a person incurs expense in or in connection with the provision of non-cash vouchers for two or more employees as members of a group or class, the expense incurred in respect of one of them is to be such part of that expense as is just and reasonable.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year in which earnings treated as received

88

(1) In the case of a non-cash voucher other than a cheque voucher, the amount treated as earnings under section 87 or 87A is to be treated as received—

(a) in the tax year in which the cost of provision is incurred, or

(b) if later, in the tax year in which the voucher is received by the employee.

(2) In the case of a cheque voucher, the amount treated as earnings under section 87 or 87A is to be treated as received in the tax year in which the voucher is handed over in exchange for money, goods or services.

(3) For the purposes of subsection (2) and sections 87(2B) and 87A(6), Where a cheque voucher is posted it is to be treated as handed over at the time of posting.

Reduction for meal vouchers

89

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Credit-tokens: introduction

Credit-tokens to which this Chapter applies

90

(1) This Chapter applies to a credit-token provided for an employee by reason of the employment which is used by the employee to obtain money, goods or services.

(2) A credit-token provided for an employee by the employer is to be regarded as provided by reason of the employment unless—

(a) the employer is an individual, and

(b) the provision is made in the normal course of the employer’s domestic, family or personal relationships.

Provision for, or use by, member of employee’s family

91

For the purposes of this Chapter—

(a) any reference to a credit-token being provided for an employee includes a reference to it being provided for a member of the employee’s family, and

(b) use of a credit-token by a member of an employee’s family is to be treated as use of the token by the employee.

Meaning of “credit-token”

92

(1) In this Chapter “credit-token” means a credit card, debit card or other card, a token, a document or other object given to a person by another person (“X”) who undertakes—

(a) on the production of it, to supply money, goods or services on credit, or

(b) if a third party (“Y”) supplies money, goods or services on its production, to pay Y for what is supplied.

(2) A card, token, document or other object can be a credit-token even if—

(a) some other action is required in addition to its production in order for the money, goods or services to be supplied;

(b) X in paying Y may take a discount or commission.

(3) For the purposes of this section—

(a) the use of an object given by X to operate a machine provided by X is to be treated as its production to X, and

(b) the use of an object given by X to operate a machine provided by Y is to be treated as its production to Y.

(4) A “credit-token” does not include a cash voucher or a non-cash voucher.

Credit-tokens: exception

Credit-token made available to public generally

93

This Chapter does not apply to a credit-token if—

(a) it is of a kind made available to the public generally, and

(b) it is provided to the employee or a member of the employee’s family on no more favourable terms than to the public generally.

Benefit of credit-token treated as earnings

94

(1) On each occasion on which a credit-token to which this Chapter applies is used by the employee in a tax year to obtain money, goods or services, the cash equivalent of the benefit of the token is to be treated as earnings from the employment for that year.

(2) The cash equivalent is the difference between—

(a) the cost of provision, and

(b) any part of that cost made good by the employee—

(i) to the person incurring it, and

(ii) on or before 6 July following the tax year which contains the occasion in question.

(3) In this section the “cost of provision” means the expense incurred—

(a) in or in connection with the provision of the money, goods or services obtained on the occasion in question, and

(b) by the person at whose cost they are provided.

(4) If a person incurs expense in or in connection with the provision of credit-tokens for two or more employees as members of a group or class, the expense incurred in respect of one of them is to be such part of that expense as is just and reasonable.

General supplementary provisions

Disregard for money, goods or services obtained

95

(1) This section applies if the cash equivalent of the benefit of a cash voucher, a non-cash voucher or a credit-token or the relevant amount in respect of a cash voucher, a non-cash voucher or a credit-token —

(a) is to be treated as earnings from an employee’s employment under this Chapter, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Money, goods or services obtained—

(a) by the employee or another person in exchange for the cash voucher or non-cash voucher, or

(b) by the employee or a member of the employee’s family by use of the credit-token,

are to be disregarded for the purposes of the Income Tax Acts.

(3) But the goods or services are not to be disregarded for the purposes of applying sections 362 and 363 (deductions where non-cash voucher or credit-token provided).

(3A) In the case of a childcare voucher, the reference in subsection (2)(a) to the services obtained in exchange for the voucher is to the provision of care for a child obtained by using it.

(4) In the case of a transport voucher, the reference in subsection (2)(a) to the services obtained in exchange for the voucher is to the passenger transport services obtained by using it.

Dispensations relating to vouchers or credit-tokens

96

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 5 — Taxable benefits: living accommodation

Living accommodation

Living accommodation to which this Chapter applies

97

(1) This Chapter applies to living accommodation provided for—

(a) an employee, or

(b) a member of an employee’s family or household,

by reason of the employment.

(1A) Where this Chapter applies to any living accommodation—

(a) the living accommodation is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms on which it is provided to any of those persons constitute a fair bargain), and

(b) sections 102 to 108 provide for an amount in respect of the benefit of the living accommodation to be treated as earnings.

(2) Living accommodation provided for any of those persons by the employer is to be regarded as provided by reason of the employment unless—

(a) the employer is an individual, and

(b) the provision is made in the normal course of the employer’s domestic, family or personal relationships.

Exceptions

Accommodation provided by local authority

98

In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements) does not apply to living accommodation provided for an employee if—

(a) the employer is a local authority,

(b) it is provided for the employee by the authority, and

(c) the terms on which it is provided are no more favourable than those on which similar accommodation is provided by the authority for persons who are not their employees but whose circumstances are otherwise similar to those of the employee.

Accommodation provided for performance of duties

99

(1) In section 102 (benefit of accommodation treated as earnings) subsection (1A) (accommodation provided otherwise than pursuant to optional remuneration arrangements) does not apply to living accommodation provided for an employee if it is necessary for the proper performance of the employee’s duties that the employee should reside in it.

(2) In section 102 (benefit of accommodation treated as earnings) subsection (1A) does not apply to living accommodation provided for an employee if—

(a) it is provided for the better performance of the duties of the employment, and

(b) the employment is one of the kinds of employment in the case of which it is customary for employers to provide living accommodation for employees.

(3) But if the accommodation is provided by a company and the employee (“E”) is a director of the company or of an associated company, the exception in subsection (1) or (2) only applies if, in the case of each company of which E is a director—

(a) E has no material interest in the company, and

(b) either—

(i) E’s employment is as a full-time working director, or

(ii) the company is non-profit-making or is a charitable company.

(4) “Non-profit-making” means that the company does not carry on a trade and its functions do not consist wholly or mainly in the holding of investments or other property.

(5) A company is “associated” with another if—

(a) one has control of the other, or

(b) both are under the control of the same person.

Accommodation provided as result of security threat

100

(a) there is a special threat to the security of the employee,

(b) special security arrangements are in force, and

Chevening House

101

(a) Chevening House, or

(b) any other premises held on the trusts of the trust instrument set out in the Schedule to the Chevening Estate Act 1959 (c. 49),

and the employee is a person nominated in accordance with those trusts.

Benefit of living accommodation treated as earnings

102

(1) This section applies if living accommodation to which this Chapter applies is provided in any period (“the taxable period”) —

(a) which consists of the whole or part of a tax year, and

(b) throughout which the employee holds the employment,

(1A) the cash equivalent of the benefit of the accommodation is to be treated as earnings from the employment for that year.

(1B) If the benefit of the accommodation is provided pursuant to optional remuneration arrangements—

(a) subsection (1A) does not apply, and

(b) the relevant amount is to be treated as earnings from the employment for that tax year.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Section 103 indicates how the cash equivalent is calculated.

(4) Section 103A indicates how the relevant amount is determined.

Calculation of cash equivalent

Method of calculating cash equivalent

103

(1) The cash equivalent is calculated—

(a) under section 105 if the cost of providing the living accommodation does not exceed £75,000; and

(b) under section 106 if the cost of providing the living accommodation exceeds £75,000.

(2) Section 104 (general rule) sets out how to calculate the cost of providing living accommodation for the purpose of determining whether or not it exceeds £75,000.

(3) In this Chapter—

“annual value”,

“person involved in providing accommodation”, and

“the property”,

have the meaning given by sections 110 to 113, and “the taxable period” has the meaning given by section 102(1) .

General rule for calculating cost of providing accommodation

104

For any tax year the cost of providing living accommodation is given by the formula—

Accommodation costing £75,000 or less

Cash equivalent: cost of accommodation not over £75,000

105

(1) The cash equivalent or modified cash equivalent is to be calculated under this section if the cost of providing the living accommodation does not exceed £75,000.

(2) The cash equivalent is the difference between—

(a) the rental value of the accommodation for the taxable period, and

(b) any sum made good , on or before 6 July following the tax year which contains the taxable period, by the employee to the person at whose cost the accommodation is provided that is properly attributable to its provision.

(2A) The modified cash equivalent is equal to the rental value of the accommodation for the taxable period.

(3) The “rental value of the accommodation” for the taxable period is (subject to subsections (4) and (4A)) the rent which would have been payable for that period if the property had been let to the employee at an annual rent equal to the annual value.

(4) Subsection (4A) applies where—

(a) a rental amount is payable by the person (“P”) at whose cost the accommodation is provided in respect of the whole or part of the taxable period (“the relevant period”), and

(b) the amount so payable is payable at an annual rate greater than the annual value.

(4A) Where this subsection applies—

(a) subsection (3) does not apply to the relevant period, and

(b) instead the “rental value of the accommodation” for the relevant period is the rental amount payable by P in respect of the relevant period.

(4B) A reference in subsection (4) or (4A) to a rental amount payable by P in respect of the relevant period is to the sum of—

(a) any rent for the period payable by P, and

(b) any amount attributed to the period in respect of a lease premium (see sections 105A and 105B).

(5) If the rental value of the accommodation for the taxable period does not exceed any sum made good by the employee as mentioned in subsection (2)(b), the cash equivalent is nil.

Accommodation costing more than £75,000

Cash equivalent: cost of accommodation over £75,000

106

(1) The cash equivalent or modified cash equivalent is calculated under this section if the cost of providing the living accommodation exceeds £75,000.

(2) To calculate the cash equivalent—

Step 1

Calculate the amount that would be the cash equivalent if section 105 applied (cash equivalent: cost of accommodation not over £75,000).

Step 2

Calculate the following amount (“the additional yearly rent”)—

$$ORI×(C-£75,000)$where—ORI is the official rate of interest in force for the purposes of Chapter 7 of this Part (taxable benefits: loans) on 6th April in the tax year, andC is the cost of providing the accommodation calculated—(a) in accordance with section 104 (general rule for calculating cost of accommodation), or(b) in a case where section 107 applies (special rule for calculating cost of providing accommodation), in accordance with that section instead.$

Step 3

Calculate the rent which would have been payable for the taxable period if the property had been let to the employee at the additional yearly rent calculated under step 2.

Step 4

Calculate the cash equivalent by—

(a) adding together the amounts calculated under steps 1 and 3, and

(b) (if allowed by subsection (3)) subtracting from that total the excess rent paid by the employee.

(2A) To calculate the modified cash equivalent—

(a) apply steps 1 to 3 in subsection (2), as if the words “cash equivalent” in step 1 were “modified cash equivalent (for the purposes of section 105)”;

(b) calculate the modified cash equivalent by adding together the amounts calculated under steps 1 and 3 as applied by paragraph (a).

(3) In step 4—

(a) paragraph (b) only applies if, in respect of the taxable period, the rent paid—

(i) by the employee,

(ii) in respect of the accommodation,

(iii) to the person providing it, and

(iv) on or before 6 July following the tax year which contains the taxable period,

exceeds the rental value of the accommodation for that period as set out in section 105(3) or (4)(b), as applicable, and

(b) “the excess rent” means the total amount of that excess.

Special rule for calculating cost of providing accommodation

107

(1) This section contains a special rule for calculating the cost of providing living accommodation which—

(a) operates for the purposes of step 2 of section 106(2) (calculating the additional yearly rent), and

(b) accordingly only operates where the cost of provision for the purposes of section 106(1) (as calculated under section 104) exceeds £75,000.

(2) This section applies if, throughout the period of 6 years ending with the date when the employee first occupied the accommodation (“the initial date”), an estate or interest in the property was held by a person involved in providing the accommodation.

It does not matter whether it was the same estate, interest or person throughout.

(3) For any tax year the cost of providing the living accommodation for the purposes mentioned in subsection (1)(a) is given by the formula—

$$MV+I-P$where—MV is the price which the property might reasonably be expected to have fetched on a sale in the open market with vacant possession as at the initial date,I is any expenditure incurred on improvements to the property which has been incurred during the period—(a) beginning with the initial date, and(b) ending with the day before the beginning of the tax year,by a person involved in providing the accommodation, andP is so much of any payment or payments made by the employee to a person involved in providing the accommodation as represents—(a) reimbursement (up to an amount not exceeding MV) of any expenditure incurred in acquiring the estate or interest in the property held on the initial date,(b) reimbursement of I, or(c) consideration for the grant to the employee of a tenancy or sub-tenancy of the property.$

(4) In estimating MV no reduction is to be made for an option in respect of the property held by—

(a) the employee,

(b) a person connected with the employee, or

Apportionment of cash equivalent

Cash equivalent: accommodation provided for more than one employee

108

(1) If, for the whole or part of a tax year, the same living accommodation is provided for more than one employee at the same time, the total of the cash equivalents for all of the employees is to be limited to the amount that would be the cash equivalent if the accommodation was provided for one employee.

(2) The cash equivalent for each of the employees is to be such part of that amount as is just and reasonable.

Other tax implications

Priority of this Chapter over Chapter 1 of this Part

109

(1) This section applies if—

(a) under this Chapter an amount is to be treated as earnings from an employee’s employment for a tax year, and

(b) under Chapter 1 of this Part an amount would, apart from this section, constitute earnings from the employment for the year in respect of the provision of the accommodation.

(2) The full amount mentioned in subsection (1)(a) is to be treated as earnings from the employment for that year under this Chapter.

(3) The amount mentioned in subsection (1)(b) is to constitute earnings from the employment for the year under Chapter 1 of this Part only to the extent that it exceeds the amount mentioned in subsection (2).

(4) In a case where the amount mentioned in subsection (1)(a) is nil—

(a) subsections (2) and (3) do not apply, and

(b) the full amount mentioned in subsection (1)(b) constitutes earnings from the employment for the year under Chapter 1.

Supplementary

Meaning of “annual value”

110

(1) For the purposes of this Chapter the “annual value” of living accommodation 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 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 subsection (1) that rent—

(a) is to be taken to be the amount that might reasonably be expected to be so obtained in respect of the letting of the accommodation, 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 relevant services.

(3) If living accommodation is of a kind that might reasonably be expected to be let on terms under which—

(a) the landlord is to provide any services which are either—

(i) relevant services, or

(ii) the repair, insurance or maintenance of any premises which do not form part of the accommodation but belong to or are occupied by the landlord, and

(b) amounts are payable in respect of the services in addition to the rent,

the rent to be established under subsection (1) in respect of the accommodation is to be increased under subsection (4).

(4) That rent is to include—

(a) where the services are relevant services, so much of the additional amounts as exceeds the cost to the landlord of providing the services;

(b) where the services are within subsection (3)(a)(ii), the whole of the additional amounts.

(5) In this section “relevant service” means a service other than the repair, insurance or maintenance of the accommodation or of any other premises.

Disputes as to annual value

111

(1) This section applies if there is a dispute as to the amount of the annual value of living accommodation for the purposes of this Chapter.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) An application for the tribunal to determine the question is to be subject to the relevant provisions of Part 5 of TMA 1970 (see, in particular, section 48(2)(b) of that Act), and each of the persons concerned is entitled to be a party to the proceedings on the application.

Meaning of “person involved in providing the accommodation”

112

For the purposes of this Chapter “person involved in providing the accommodation” means any of the following—

(a) the person providing the accommodation;

(b) the employee’s employer (if not within paragraph (a));

Meaning of “the property”

113

For the purposes of this Chapter “the property”, in relation to living accommodation, means the property consisting of that accommodation.

General

114

(1) This Chapter applies to a car or a van in relation to a particular tax year if in that year the car or van—

(a) is made available (without any transfer of the property in it) to an employee or a member of the employee’s family or household,

(b) is so made available by reason of the employment (see section 117), and

(1A) Where this Chapter applies to a car or van, the car or van is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms on which it is made available to the employee or member constitute a fair bargain).

(2) Where this Chapter applies to a car or van—

(a) sections 120 to 148 provide for an amount in respect of the benefit of the car to be treated as earnings,

(b) sections 149 to 153 provide for an amount in respect of the benefit of any fuel provided for the car to be treated as earnings, ...

(d) sections 160 to 164 provide for an amount in respect of the benefit of any fuel provided for the van to be treated as earnings in certain circumstances.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3A) This Chapter does not apply to a van in relation to a tax year if the private use of the van during the tax year by the employee or member of the employee’s family or household is insignificant.

(4) The following provisions of this Chapter provide for further exceptions—

section 167 (pooled cars);

section 168 (pooled vans);

section 169 (car available to more than one member of family or household employed by same employer).

section 169A (van available to more than one member of family or household employed by same employer).

Meaning of “car” and “van”

115

(1) In this Chapter—

“car” means a mechanically propelled road vehicle which is not—a goods vehicle,a motor cycle,an invalid carriage, ora vehicle of a type not commonly used as a private vehicle and unsuitable to be so used;

“van” means a mechanically propelled road vehicle which—is a goods vehicle, andhas a design weight not exceeding 3,500 kilograms,and which is not a motor cycle.

(2) For the purposes of subsection (1)—

“design weight” means the weight which a vehicle is designed or adapted not to exceed when in normal use and travelling on a road laden;

“goods vehicle” means a vehicle of a construction primarily suited for the conveyance of goods or burden of any description;

“invalid carriage” has the meaning given by section 185(1) of the Road Traffic Act 1988 (c. 52);

“motor cycle” has the meaning given by section 185(1) of the Road Traffic Act 1988.

Meaning of when car or van is available to employee

116

(1) For the purposes of this Chapter a car or van is available to an employee at a particular time if it is then made available, by reason of the employment and without any transfer of the property in it, to the employee or a member of the employee’s family or household.

(2) References in this Chapter to—

(a) the time when a car or van is first made available to an employee are to the earliest time when the car or van is made available as mentioned in subsection (1), and

(b) the last day in a year on which a car or van is available to an employee are to the last day in the year on which the car or van is made available as mentioned in subsection (1).

(3) This section does not apply to section 124A or 138 (automatic car or van for a disabled employee).

Meaning of car or van made available by reason of employment

117

(1) For the purposes of this Chapter a car or van made available by an employer to an employee or member of an employee's family or household is to be regarded as made available by reason of the employment unless subsection (2) or (3) excludes the application of this subsection.

(2) Subsection (1) does not apply where—

(a) the employer is an individual, and

(b) the car or van in question is made available in the normal course of the employer's domestic, family or personal relationships.

(3) Subsection (1) does not apply where—

(a) the employer carries on a vehicle hire business under which cars or vans of the same kind are made available to members of the public for hire,

(b) the car or van in question is hired to the employee or member in the normal course of that business, and

Availability for private use

118

(1) For the purposes of this Chapter a car or van made available in a tax year to an employee or a member of the employee’s family or household is to be treated as available for the employee’s or member’s private use unless in that year—

(a) the terms on which it is made available prohibit such use, and

(b) it is not so used.

(2) In this Chapter “private use”, in relation to a car or van made available to an employee or a member of the employee’s family or household, means any use other than for the employee’s business travel (see section 171(1)).

Where alternative to benefit of car offered

119

(1) This section applies where in a tax year—

(a) a car is made available as mentioned in section 114(1),

(b) the car's CO₂ emissions figure (see sections 133 to 138) does not exceed 75 grams per kilometre, and

(2) The mere fact that the alternative is offered does not result in an amount in respect of the benefit constituting earnings by virtue of Chapter 1 of this Part (earnings).

Cars: benefit treated as earnings

Benefit of car treated as earnings

120

(1) If this Chapter applies to a car in relation to a particular tax year, the cash equivalent of the benefit of the car is to be treated as earnings from the employment for that year.

(2) In such a case (including a case where the cash equivalent of the benefit of the car is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the car in that year.

(3) Any reference in this Act to a case where the cash equivalent of the benefit of a car is treated as the employee's earnings for a year by virtue of this section includes a case where the cash equivalent is nil.

(4) This section is subject to section 120A.

Method of calculating the cash equivalent of the benefit of a car

121

(1) The cash equivalent of the benefit of a car for a tax year is calculated as follows—

Step 1

Find the price of the car in accordance with sections 122 to 124A.

Step 2

Add the price of any accessories which fall to be taken into account in accordance with sections 125 to 131.

Step 3

Make any deduction under section 132 for capital contributions made by the employee to the cost of the car or accessories. The resulting amount is the interim sum.

Step 4

...

Step 5

Find the appropriate percentage for the car for the year in accordance with sections 133 to 142.

Step 6

Multiply the interim sum by the appropriate percentage for the car for the year.

Step 7

Make any deduction under section 143 for any periods when the car was unavailable.

The resulting amount is the provisional sum.

Step 8

Make any deduction from the provisional sum under section 144 in respect of payments by the employee for the private use of the car.

The result is the cash equivalent of the benefit of the car for the year.

(2) The method of calculation set out in subsection (1) is modified in the special cases dealt with in—

section 146 (cars that run on road fuel gas), and

section 147 (classic cars: 15 years of age or more).

(3) Where the car is shared the cash equivalent is calculated under this section in accordance with section 148.

Cars: the price of a car

The price of the car

122

(1) For the purposes of this Chapter the price of a car means—

This is subject to section 124A (automatic car for a disabled employee).

(a) its list price, if it has one, or

(b) its notional price, if it has no list price.

(2) This is subject to section 124A (automatic car for a disabled employee).

The list price of a car

123

(1) In this Chapter a car’s “list price” means the price published by the car’s manufacturer, importer or distributor (as the case may be) as the inclusive price appropriate for a car of that kind if sold—

(a) in the United Kingdom,

(b) singly,

(d) in the open market, and

(e) on the day immediately before the date of the car’s first registration.

(2) The “inclusive price” means the price inclusive of—

(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business, and

(b) any relevant taxes (see section 171(1)).

The notional price of a car with no list price

124

(1) In this Chapter a car’s “notional price” means the price which might reasonably have been expected to be its list price if its manufacturer, importer or distributor (as the case may be) had published a price as the inclusive price appropriate for a sale of a car of the same kind sold—

(a) in the United Kingdom,

(b) singly,

(d) in the open market,

(e) on the day immediately before the date of the car’s first registration, and

(f) with accessories equivalent to the qualifying accessories (see section 125) available with the car at the time when it was first made available to the employee.

(2) In this section “inclusive price” has the same meaning as in section 123.

Cars: treatment of accessories

125

(1) In this Chapter “qualifying accessory” means an accessory which—

(a) is made available for use with the car without any transfer of the property in the accessory,

(b) is made available by reason of the employment, and

(2) For the purposes of this Chapter “accessory” includes any kind of equipment but does not include—

(a) equipment necessarily provided for use in the performance of the duties of the employment;

(b) equipment by means of which a car is capable of running on road fuel gas;

(d) a mobile telephone (within the meaning given in section 319(2)).

(3) But subsection (2)(b) does not apply in relation to a car to which section 137 (different CO₂ emissions figure for bi-fuel cars) applies.

(3A) Subsection (2) needs to be read with section 125A (security features not to be regarded as accessories).

(4) In this Chapter—

“standard accessory” means an accessory equivalent to an accessory assumed to be available with cars of the same kind as the car in question in arriving at the list price, and

“non-standard accessory” means any other accessory.

Amounts taken into account in respect of accessories

126

(1) The price of the following accessories is to be taken into account under step 2 of section 121(1) and step 2 of section 121B(1) —

(a) in the case of a car with a list price, the price of any initial extra accessory, and

(b) in the case of any car, the price of any later accessory.

(2) In this Chapter an “initial extra accessory” means a qualifying accessory which—

(a) is a non-standard accessory,

(b) is available with the car at the time when it is first made available to the employee, and

(c) if it is an accessory in relation to which there is no published price of the manufacturer, importer or distributor of the car (see section 128), is available with the car in the tax year in question.

(3) In this Chapter a “later accessory” means a qualifying accessory which—

(a) is available with the car in the tax year in question,

(b) was not available with the car at the time when it was first made available to the employee,

(d) has a price of at least £100.

(4) In this section references to the price of an accessory are to—

(a) its list price, if it has one, or

(b) its notional price, if it has no list price.

(5) This section is subject to section 131 (replacement accessories).

The list price of an accessory

127

(1) For the purposes of this Chapter the list price of an initial extra accessory is—

(a) the published price of the manufacturer, importer or distributor of the car (see section 128), or

(b) if there is no such price, the published price of the manufacturer, importer or distributor of the accessory (see section 129).

(2) For the purposes of this Chapter the list price of a later accessory is the published price of the manufacturer, importer or distributor of the accessory (see section 129).

Accessory: published price of the car manufacturer etc.

128

(1) In this Chapter the “published price of the manufacturer, importer or distributor of the car” in relation to an accessory means the price published by the car’s manufacturer, importer or distributor (as the case may be) as the inclusive price appropriate for an equivalent accessory if sold with a car of the same kind—

(a) in the United Kingdom,

(b) singly,

(d) in the open market, and

(e) on the day immediately before the date of the car’s first registration.

(2) The “inclusive price” means the price inclusive of—

(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business,

(b) any relevant taxes other than car tax (see section 171(1)), and

Accessory: published price of the accessory manufacturer etc.

129

(1) In this Chapter the “published price of the manufacturer, importer or distributor of the accessory” in relation to an accessory means the price published by or on behalf of the manufacturer, importer or distributor of the accessory (as the case may be) as the inclusive price appropriate for such an accessory if sold—

(a) in the United Kingdom,

(b) singly,

(d) in the open market, and

(e) at the time immediately before the accessory concerned is first made available for use with the car.

(2) The “inclusive price” means the price inclusive of—

(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business,

(b) any relevant taxes other than car tax (see section 171(1)), and

(c) in the case of an accessory permanently attached to the car, the price which the seller would charge for attaching it.

(3) In the case of an initial extra accessory, the time referred to in subsection (1)(e) may be a time before the car is first made available to the employee.

The notional price of an accessory

130

(1) In this Chapter the “notional price” of an accessory means the inclusive price which it might reasonably have been expected to fetch if sold—

(a) in the United Kingdom,

(b) singly,

(d) in the open market, and

(e) at the time immediately before the accessory concerned is first made available for use with the car.

(2) The “inclusive price” means the price inclusive of—

(a) any charge for delivery by the manufacturer, importer or distributor to the seller’s place of business,

(b) any relevant taxes other than car tax (see section 171(1)), and

(c) in the case of an accessory permanently attached to the car, the price which the seller would charge for attaching it.

(3) In the case of an initial extra accessory, the time referred to in subsection (1)(e) may be a time before the car is first made available to the employee.

Replacement accessories

131

(1) This section applies for the purposes of sections 121(1) and 121B(1) where—

(a) a later accessory is available with the car in the tax year in question,

(b) that accessory (“the new accessory”) replaced another qualifying accessory (“the old accessory”) in that year or an earlier tax year, and

(1A) In the application of this section for the purposes of section 121B(1)—

(a) references to the cash equivalent of the benefit of the car for the tax year are to be read as references to the modified cash equivalent of the benefit of the car for the tax year, and

(b) references to step 2 of section 121(1) are to be read as references to step 2 of section 121B(1).

(2) If the new accessory is not superior to the old accessory, the cash equivalent of the benefit of the car for the tax year is to be calculated under step 2 of section 121(1) as if—

(a) the replacement has not been made, and

(b) the new accessory is a continuation of the old accessory.

(3) If the new accessory is superior to the old accessory and the conditions in subsection (4) are met, the cash equivalent of the benefit of the car for the tax year is to be calculated under step 2 of section 121(1)—

(a) as if the old accessory was not available with the car in that tax year, or

(b) where the price of the old accessory would (apart from this section) be added to the price of the car under step 2 of section 121(1) as an initial extra accessory, as if it was not available with the car at the time when the car was first made available to the employee.

(4) The conditions mentioned in subsection (3) are that—

(a) the old accessory was a non-standard accessory, and

(b) both the old and the new accessory would (apart from this section) be taken into account under step 2 of section 121(1) in calculating the cash equivalent of the benefit of the car for the year.

(5) For the purposes of this section a new accessory is superior to an old accessory if the price of the new accessory exceeds whichever is the greater of—

(a) the price of the old accessory, and

(b) the price of an accessory equivalent to the old accessory at the time immediately before the new accessory is first made available for use with the car.

(6) In this section references to the price of an accessory are to—

(a) its list price, if it has one, or

(b) its notional price, if it has no list price.

Cars: capital contributions by employee

Capital contributions by employee

132

(1) This section applies for the purposes of section 121(1) if the employee contributes a capital sum to expenditure on the provision of—

(a) the car, or

(b) any qualifying accessory which is taken into account in calculating the cash equivalent of the benefit of the car.

(2) A deduction is to be made from the amount carried forward from step 2 of section 121(1)—

(a) for the tax year in which the contribution is made, and

(b) for all subsequent years in which the employee is chargeable to tax in respect of the car by virtue of section 120.

(3) The amount of the deduction allowed in any tax year is the lesser of—

(a) the total of the capital sums contributed by the employee in that year and any earlier years to expenditure on the provision of—

(i) the car, or

(ii) any qualifying accessory which is taken into account in calculating the cash equivalent of the benefit of the car for the tax year in question, and

(b) £5,000.

Cars: the appropriate percentage

How to determine the “appropriate percentage”

133

(1) The “appropriate percentage” for a car for a year depends upon when the car was first registered.

(2) If the car was first registered on or after 1st January 1998, the “appropriate percentage” depends upon whether the car—

(a) is a car with a CO₂ emissions figure (see section 134(1)),

(b) is a car without a CO₂ emissions figure (see section 134(2)), or

and is determined under sections 139 to 141.

(3) If the car was first registered before 1st January 1998, the “appropriate percentage” is determined under section 142.

Meaning of car with or without a CO2 emissions figure

134

(1) In this Chapter a “car with a CO₂ emissions figure” means—

(a) a car first registered on or after 1st January 1998 but before 1st October 1999 to which section 135 applies,

(b) a car first registered on or after 1st October 1999 but before IP completion day to which section 136 (registration from 1st October 1999 to IP completion day) applies, ...

(ba) a car first registered on or after IP completion day to which section 136A (registration on or after IP completion day) applies,

(c) a car first registered on or after 1st January 2000 but before IP completion day which is a car to which section 137 (bi-fuel cars : registration from 1st January 2000 to IP completion day) applies , or

(d) a car first registered on or after IP completion day to which section 137A (bi-fuel cars: registration on or after IP completion day) applies.

(2) In this Chapter a “car without a CO₂ emissions figure” means any other car first registered on or after 1st January 1998.

Cars: appropriate percentage: first registered on or after 1st January 1998

Car with a CO2 emissions figure: pre-October 1999 registration

135

(1) This section applies to a car first registered on or after 1st January 1998 but before 1st October 1999 if when it was so registered—

(a) it conformed to a vehicle type with an EC type-approval certificate (see section 171(1)), or

(b) it had a UK approval certificate (see section 171(1)),

which specifies a CO₂ emissions figure in terms of grams per kilometre driven.

(2) The car’s CO₂ emissions figure is that specified figure.

(3) This is subject to section 138 (automatic car for a disabled employee).

Car with a CO2 emissions figure: post-September 1999 registration

136

(1) This section applies to a car first registered on or after 1st October 1999 but before IP completion day if it is so registered on the basis of—

(a) an EC certificate of conformity (see section 171(1)), or

(b) a UK approval certificate (see section 171(1)),

which specifies a CO₂ emissions figure in terms of grams per kilometre driven.

(2) The car’s CO₂ emissions figure is that specified figure unless more than one figure is specified, in which case the car’s CO₂ emissions figure is the figure specified as the CO₂ emissions (combined) figure.

(2A) For the purpose of determining the car's CO₂ emissions figure in a case where the car is first registered before 6 April 2020, ignore any WLTP (worldwide harmonised light vehicles test procedures) values specified in the EC certificate of conformity or UK approval certificate.

(2B) For the purpose of determining the car's CO₂ emissions figure in a case where the car is first registered on or after 6 April 2020, ignore any values specified in the EC certificate of conformity or UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.

(3) Subsection (2) is subject to—

(a) section 137 (bi-fuel cars : registration from 1st January 2000 to IP completion day), and

(b) section 138 (automatic car for a disabled employee).

Car with a CO2 emissions figure: bi-fuel cars

137

(1) This section applies to a car first registered on or after 1st January 2000 but before IP completion day if it is so registered on the basis of—

(a) an EC certificate of conformity (see section 171(1)), or

(b) a UK approval certificate (see section 171(1)),

which specifies separate CO₂ emissions figures in terms of grams per kilometre driven for different fuels.

(2) The car’s CO₂ emissions figure is—

(a) the lowest figure specified, or

(b) if there is more than one figure specified in relation to each fuel, the lowest CO₂ emissions (combined) figure specified.

(2A) For the purpose of determining the car's CO₂ emissions figure in a case where the car is first registered before 6 April 2020, ignore any WLTP (worldwide harmonised light vehicles test procedures) values specified in the EC certificate of conformity or UK approval certificate.

(2B) For the purpose of determining the car's CO₂ emissions figure in a case where the car is first registered on or after 6 April 2020, ignore any values specified in the EC certificate of conformity or UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.

(3) Subsection (2) is subject to section 138 (automatic car for a disabled employee).

Car with a CO2 emissions figure: automatic car for a disabled employee

138

(1) This section applies where—

(a) a car with a CO₂ emissions figure has automatic transmission (“the automatic car”),

(b) at any time in the year when the automatic car is available to the employee (“E”), E holds a disabled person’s badge, and

(c) by reason of E’s disability, E must, in the event of wanting to drive a car, drive a car which has automatic transmission.

(2) If, under sections 135 to 137, the automatic car’s CO₂ emissions figure is more than it would have been if the automatic car had been an equivalent manual car, the CO₂ emissions figure for the automatic car is to be the CO₂ emissions figure for an equivalent manual car.

(3) In subsection (2) “an equivalent manual car” means a car which—

(a) is first registered at or about the same time as the automatic car, and

(b) does not have automatic transmission, but otherwise is the closest variant available of the make and model of the automatic car.

(4) For the purposes of this section a car has automatic transmission if—

(a) the driver of the car is not provided with any means by which the driver may vary the gear ratio between the engine and the road wheels independently of the accelerator and the brakes, or

(b) the driver is provided with such means, but they do not include—

(i) a clutch pedal, or

(ii) a lever which the driver may operate manually.

(5) For the purposes of this section a car is available to an employee at a particular time if it is then made available, by reason of the employment and without any transfer of the property in it, to the employee.

Car with a CO2 emissions figure: the appropriate percentage

139

(1) The appropriate percentage for a year for a car with a CO₂ emissions figure of less than 75 is determined in accordance with the following table.

Car	Appropriate percentage
Car with CO₂ emissions figure of 0	3%
Car with CO₂ emissions figure of 1–50	As follows
Car with electric range figure of 130 or more	3%
Car with electric range figure of 70–129	6%
Car with electric range figure of 40–69	9%
Car with electric range figure of 30–39	13%
Car with electric range figure of less than 30	15%
Car with CO₂ emissions figure of 51–54	16%
Car with CO₂ emissions figure of 55–59	17%
Car with CO₂ emissions figure of 60–64	18%
Car with CO₂ emissions figure of 65–69	19%
Car with CO₂ emissions figure of 70–74	20%

(2) For the purposes of subsection (1) and the table—

(a) if a CO₂ emissions figure is not a whole number, round it down to the nearest whole number, and

(b) if an electric range figure is not a whole number, round it up to the nearest whole number.

(3) The appropriate percentage for a year for a car with a CO₂ emissions figure of 75 or more is whichever is the lesser of—

(a) 21% plus one percentage point for each 5 grams per kilometre driven by which the CO₂ emissions figure exceeds 75, and

(b) 37%.

(4) For the purposes of subsection (3), if a CO₂ emissions figure is not a multiple of 5, round it down to the nearest multiple of 5.

(5) In this section, an “electric range figure” is the number of miles which is the equivalent of the number of kilometres specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate on the basis of which a car is registered, as being the maximum distance for which the car can be driven in electric mode without recharging the battery.

(5A) For the purpose of determining the electric range figure for a car first registered before 6 April 2020, ignore any WLTP (worldwide harmonised light vehicle test procedures) values specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate.

(5B) For the purpose of determining the electric range figure for a car first registered on or after 6 April 2020, ignore any values specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.

(7) This section is subject to—

(a) section 141 (diesel cars), and

(b) any regulations made by the Treasury under section 170(4) (power to reduce the appropriate percentage).

Car without a CO2 emissions figure: the appropriate percentage

140

(1) The appropriate percentage for a year for a car without a CO₂ emissions figure is determined under this section.

(2) If the car has an internal combustion engine with one or more reciprocating pistons, the appropriate percentage for the year is—

Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	18% 20% 24%
More than 1,400 but not more than 2,000	29% 31% 35%
More than 2,000	37%

For this purpose a car’s cylinder capacity is the capacity of its engine as calculated for the purposes of VERA 1994.

(3) If subsection (2) does not apply, the appropriate percentage for the year is—

(a) 9% 13% 16% 2% if the car cannot in any circumstances emit CO2 by being driven, and

(b) 37% in any other case.

(3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) This section is subject to—

(a) section 141 (diesel cars), and

(b) any regulations made by the Treasury under section 170(4) (power to reduce the appropriate percentage).

Diesel cars: the appropriate percentage

141

(1) This section applies to a diesel car first registered on or after 1 January 1998 but before 1 September 2017.

(1A) This section applies to a diesel car first registered on or after 1 September 2017 if it does not meet the Euro 6d emissions standard.

(2) To determine the appropriate percentage for the car for a year—

Step 1

Determine whether the car is a car with a CO₂ emissions figure or a car without a CO₂ emissions figure (see section 134).

Step 2

Take what would be the appropriate percentage for the car for the year under section 139 or 140 as appropriate.

Step 3

The appropriate percentage for the car for the year is whichever is the smaller of—

(a) the figure resulting from the addition of 4 percentage points to the figure found under step 2, and

(b) 35%.

(2A) A vehicle meets the Euro 6d emissions standard only if it is first registered on the basis of an EC certificate of conformity which indicates that the exhaust emission level is Euro 6d (and it does not meet that standard if it is first registered on the basis of an EC certificate of conformity which indicates that that level is Euro 6d-TEMP).

(3) In this section “diesel car” means a car which is propelled solely by diesel.

(4) This section is subject to any regulations made by the Treasury under section 170(4) (power to reduce the appropriate percentage).

Cars: appropriate percentage: first registered before 1st January 1998

Car first registered before 1st January 1998: the appropriate percentage

142

(1) The appropriate percentage for a car first registered before 1st January 1998 is determined under this section.

(2) If the car has an internal combustion engine with one or more reciprocating pistons, the appropriate percentage for the year is—

Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	24%
More than 1,400 but not more than 2,000	35%
More than 2,000	37%

For this purpose a car’s cylinder capacity is the capacity of its engine as calculated for the purposes of VERA 1994.

(3) If subsection (2) does not apply, the appropriate percentage for the year is 37%.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cars: unavailability or payments for private use

Deduction for periods when car unavailable

143

(A1) This section has effect for the purposes of—

(a) section 121(1) (method of calculating the cash equivalent of the benefit of a car), and

(b) section 121B(1) (optional remuneration arrangements: meaning of “modified cash equivalent”).

(1) A deduction is to be made from the amount carried forward from step 6 of section 121(1) or (as the case may be) step 4 of section 121B(1) if the car has been unavailable on any day during the tax year in question.

(2) For the purposes of this section a car is unavailable on any day if the day—

(a) falls before the first day on which the car is available to the employee,

(b) falls after the last day on which the car is available to the employee, or

(3) The amount of the deduction is given by the formula—

$$UY×A$where—U is the number of days in the year on which the car is unavailable,Y is the number of days in that year, andA is the amount carried forward from step 6 of section 121(1) or (as the case may be) step 4 of section 121B(1) .$

(4) This section is subject to section 145 (modification where car temporarily replaced).

Deduction for payments for private use

144

(1) A deduction is to be made from the provisional sum (see subsection (1A)) if, as a condition of the car 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) pays that amount on or before 6 July following that year.

(1A) In this section “the provisional sum” means the provisional sum calculated under—

(a) step 7 of section 121(1) (method of calculating the cash equivalent of the benefit of a car), or

(b) step 2 of section 121A(1) (optional remuneration arrangements: method of calculating relevant amount).

(2) If the amount paid as mentioned in subsection (1)(b) by the employee in respect of that year is equal to or exceeds the provisional sum, the provisional sum is reduced so that—

(a) in a case within subsection (1A)(a), the cash equivalent of the benefit of the car for the year is nil, or

(b) in a case within subsection (1A)(b), the relevant amount for the purposes of section 120A is nil.

(3) Where subsection (2) does not apply, the amount paid as mentioned in subsection (1)(b) by the employee in respect of the year is deducted from the provisional sum in order to give—

(a) in a case within subsection (1A)(a), the cash equivalent of the benefit of the car for the year, or

(b) in a case within subsection (1A)(b), the relevant amount for the purposes of section 120A.

(4) In this section the reference to the car being available for the employee’s private use includes a reference to the car being available for the private use of a member of the employee’s family or household.

(5) This section is subject to section 145 (modification where car temporarily replaced).

Modification of provisions where car temporarily replaced

145

(1) This section applies if—

(a) the car normally available to an employee (“the normal car”) is not available to the employee for a period of less than 30 days,

(b) another car (“the replacement car”) is made available to the employee in order to replace the normal car for the whole or part of that period,

(i) in respect of both the normal car and the replacement car by virtue of section 120, or

(ii) in respect of both the normal car and the replacement car by virtue of section 120A, and”.

(d) the replacement car meets condition A or B.

(2) Condition A is met if the replacement car is not materially better than the normal car.

(3) Condition B is met if the replacement car is not made available to the employee under an arrangement of which the main purpose, or one of the main purposes, is to provide the employee with the benefit of a car which is materially better than the normal car.

(4) If this section applies—

(a) section 143 (deduction for periods when car unavailable) applies so that the replacement car is to be treated as unavailable on the days of the period during which it replaces the normal car, and

(b) section 144 (deduction for payments for private use) applies as if the replacement had not been made and the replacement car were a continuation of the normal car.

(5) A replacement car is regarded as materially better than the normal car if—

(a) it is materially better in quality, or

(b) when calculating the cash equivalent of the benefit of the replacement car, the interim sum calculated under step 3 of section 121(1) is materially higher than the interim sum calculated in relation to the normal car.

(6) Where this section applies by virtue of subsection (1)(c)(ii), the condition in subsection (5)(b) is to be taken to be met if it would be met on the assumption that the cash equivalent of the benefit of the cars in question is to be calculated under section 121(1).

Cars: special cases

Cars that run on road fuel gas

146

(1) This section applies for the purposes of sections 121 and 121B if the car—

(a) has been manufactured so as to be capable of running on road fuel gas, and

(b) is not a car to which section 137 (different CO₂ emissions figure for bi-fuel cars) applies.

(2) The price of the car found under step 1 of section 121(1) or (as the case may be) step 1 of section 121B(1) is to be reduced by so much of that price as it is reasonable to attribute to the car being manufactured in such a way as to be capable of running on road fuel gas rather than in such a way as to be capable of running only on petrol.

Classic cars: 15 years of age or more

147

(1) This section applies in calculating the cash equivalent of the benefit of a car for a tax year if—

(a) the age of the car at the end of the year is 15 years or more,

(b) the market value of the car for the year is £15,000 or more, and

(2) For the interim sum calculated under step 3 substitute the market value of the car for the tax year in question less any deductions under subsection (6).

(3) The market value of a car for a tax year is the price which the car might reasonably have been expected to fetch on a sale in the open market on—

(a) the last day of that year, or

(b) the last day in that year on which the car is available to the employee if that is earlier.

(4) It is assumed that any qualifying accessories available with the car on that day are included in the sale.

(5) Subsection (6) applies if the employee contributes a capital sum to expenditure on the provision of—

(a) the car, or

(b) any qualifying accessory which is taken into account in determining the market value of the car.

(6) A deduction is to be made from the market value of the car—

(a) for the tax year in which the contribution is made, and

(b) for all subsequent years in which the employee is chargeable to tax in respect of the car by virtue of section 120.

(7) The amount of the deduction allowed in any tax year is the lesser of—

(a) the total of the capital sums contributed by the employee in that year and any earlier years to expenditure on the provision of—

(i) the car, or

(ii) any qualifying accessory which is taken into account in determining the market value of the car for the tax year in question, and

(b) £5,000.

Cars: reduction where shared car

Reduction of cash equivalent where car is shared

148

(1) This section applies for the purposes of sections 121 and 121B if in a tax year a car—

(a) is available to more than one employee concurrently,

(b) is so made available by the same employer, and

and two or more of those employees are chargeable to tax in respect of the car in that year by virtue of sections 120 and 120A .

(2) The amount to be treated as earnings in respect of the benefit of the car is to be calculated separately for each of those employees for that tax year (whether under section 120 or section 120A).

(2A) In the case of an employee chargeable to tax in respect of the car by virtue of section 120 The provisional sum calculated under step 7 in section 121(1) is to be reduced on a just and reasonable basis before making any deduction under step 8.

(2B) In the case of an employee chargeable to tax in respect of the car by virtue of section 120A, the modified cash equivalent (as determined under section 121B(1)) is to be reduced on a just and reasonable basis.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) In this section the reference to the car being available for each employee’s private use includes a reference to the car being available for the private use of a member of the employee’s family or household.

Car fuel: benefit treated as earnings

Benefit of car fuel treated as earnings

149

(1) If in a tax year—

(a) fuel is provided for a car by reason of an employee’s employment, and

(b) that person is chargeable to tax in respect of the car by virtue of section 120 or 120A,

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 150 to 153.

(3) Fuel is to be treated as provided for a car, 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 car is discharged,

(b) a non-cash voucher or a credit-token is used to obtain fuel for the car,

(d) any sum is paid in respect of expenses incurred in providing fuel for the car.

(4) References in this section to fuel do not include any facility or means for supplying electrical energy or any energy for a car which cannot in any circumstances emit CO₂ by being driven.

Car fuel: calculating the cash equivalent

150

(1) The cash equivalent of the benefit of the fuel is the appropriate percentage of £28,200.

(2) The “appropriate percentage” means the appropriate percentage determined in accordance with sections 133 to 142 for the purpose of calculating the cash equivalent of the benefit of the car for which the fuel is provided.

(3) But the cash equivalent may be—

(a) nil where either of the conditions in section 151 is met;

(b) proportionately reduced under section 152;

Car fuel: nil cash equivalent

151

(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 ...—

(a) in the tax year in question, 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 on or before 6 July following that tax year .

(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)).

Car fuel: proportionate reduction of cash equivalent

152

(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 car for which the fuel is provided is unavailable (within the meaning of section 143 (deduction for periods when car unavailable)).

(2) The cash equivalent of the benefit of the fuel is also to be proportionately reduced if ...—

(a) for any part of the tax year in question, the facility for the provision of fuel as mentioned in section 149(1) is not available,

(b) for any part of the tax year in question, the fuel is made available only for business travel (see section 171(1)), or

(i) for any part of the tax year in question, 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

(ii) the employee does make good that expense on or before 6 July following that tax year

(3) The fact that any of the conditions specified in subsection (2) 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.

(4) Where the cash equivalent is to be proportionately reduced under subsection (1) or (2) (or under both those subsections), the reduced amount is given by the formula—

$$CE×Y-DY$where—CE is the amount of the cash equivalent before any reduction,Y is the number of days in the tax year in question, andD is the total number of days in that year on which either the car is unavailable or one or more of the conditions in subsection (2) is met.$

Car fuel: reduction of cash equivalent

153

If a reduction of the cash equivalent of the benefit of the car for which the fuel is provided is made under section 148 (reduction of cash equivalent where car is shared), a corresponding reduction is to be made in relation to the cash equivalent of the benefit of the fuel.

Vans: benefit treated as earnings

Benefit of van treated as earnings

154

(1) If this Chapter applies to a van in relation to a particular tax year, the cash equivalent of the benefit of the van is to be treated as earnings from the employment for that year.

(2) In such a case (including a case where the cash equivalent of the benefit of the van is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the van for that year.

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Income Tax (Earnings and Pensions) Act 2003

Provision for, or receipt by, member of employee’s family

74

Meaning of “cash voucher”

Meaning of “cash voucher”

75

Sickness benefits-related voucher

76

Apportionment of cost of provision of voucher

77

Cash vouchers: exceptions

Voucher made available to public generally

78

Voucher issued under approved scheme

79

Vouchers where payment of sums exempt from tax

80

Benefit of cash voucher treated as earnings

Benefit of cash voucher treated as earnings

81

Non-cash vouchers: introduction

Non-cash vouchers to which this Chapter applies

82

Provision for, or receipt by, member of employee’s family

83

Meaning of “non-cash voucher”

Meaning of “non-cash voucher”

84

Non-cash voucher: exceptions

Non-cash voucher made available to public generally

85

Transport vouchers under pre-26th March 1982 arrangements

86

Benefit of non-cash voucher treated as earnings

Benefit of non-cash voucher treated as earnings

87

Year in which earnings treated as received

88

Reduction for meal vouchers

89

Credit-tokens: introduction

Credit-tokens to which this Chapter applies

90

Provision for, or use by, member of employee’s family

91

Meaning of “credit-token”

Meaning of “credit-token”

92

Credit-tokens: exception

Credit-token made available to public generally

93

Benefit of credit-token treated as earnings

Benefit of credit-token treated as earnings

94

General supplementary provisions

Disregard for money, goods or services obtained

95

Dispensations relating to vouchers or credit-tokens

96

Chapter 5 — Taxable benefits: living accommodation

Living accommodation

Living accommodation to which this Chapter applies

97

Exceptions

Accommodation provided by local authority

98

Accommodation provided for performance of duties

99

Accommodation provided as result of security threat

100

Chevening House

101

Benefit of living accommodation treated as earnings

Benefit of living accommodation treated as earnings

102

Calculation of cash equivalent

Method of calculating cash equivalent

103

General rule for calculating cost of providing accommodation

104