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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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Reform history JSON API

Kind of vehicle	Rate per mile
Car or van	45p for the first 10,000 miles
	25p after that
Motor cycle	24p
Cycle	20p

(3) The reference in subsection (2) to “the first 10,000 miles” is to the total number of miles of business travel in relation to the employment, or any associated employment, by car or van in the tax year in question.

(4) One employment is associated with another if—

(a) the employer is the same;

(b) the employers are partnerships or bodies and an individual or another partnership or body has control over both of them; or

(5) In subsection (4)(b)—

(a) “control”, in relation to a body corporate or partnership, has the meaning given by section 995 of ITA 2007 (in accordance with section 719 of this Act), and

(b) the definition of “control” in that section of that Act applies (with the necessary modifications) in relation to an unincorporated association as it applies in relation to a body corporate.

(6) The Treasury may by regulations amend subsection (2) so as to alter the rates or rate bands.

Mileage allowance relief

231

(1) An employee is entitled to mileage allowance relief for a tax year—

(a) if the employee uses a vehicle to which this Chapter applies for business travel, and

(b) the total amount of all mileage allowance payments, if any, made to the employee for the kind of vehicle in question for the tax year is less than the approved amount for such payments applicable to that kind of vehicle.

(2) The amount of mileage allowance relief to which an employee is entitled for a tax year is the difference between—

(a) the total amount of all mileage allowance payments, if any, made to the employee for the kind of vehicle in question, and

(b) the approved amount for such payments applicable to that kind of vehicle.

(3) Subsection (1) does not apply if—

(a) the employee is a passenger in the vehicle, or

(b) the vehicle is a company vehicle.

Giving effect to mileage allowance relief

232

(1) A deduction is allowed for mileage allowance relief to which an employee is entitled for a tax year.

(2) If any of the employee’s earnings—

(a) are taxable earnings in the tax year in which the employee receives them, and

(b) are not also taxable earnings in that year that fall within subsection (3),

the relief is allowed as a deduction from those earnings in calculating net taxable earnings in the year.

(3) If any of the employee’s earnings are taxable earnings in the tax year in which the employee remits them to the United Kingdom, there may be deducted from those earnings the amount of any mileage allowance relief—

(a) for that tax year, and

(b) for any earlier tax year in which the employee was resident in the United Kingdom,

which, on the assumptions mentioned in subsection (4), would have been deductible under subsection (2).

(4) The assumptions are—

(a) that subsection (2)(b) does not apply, and

(b) where applicable, that the earnings constitute taxable earnings in the tax year in which the employee receives them.

(5) Subsection (3) applies only to the extent that the mileage allowance relief cannot be deducted under subsection (2).

(6) A deduction shall not be made twice, whether under subsection (2) or (3), in respect of the same mileage allowance relief.

(6A) If the earnings from which a deduction allowed under this section is deductible include earnings that are “excluded” within the meaning of section 15(1A)—

(a) the amount of the deduction allowed is a proportion of the amount that would be allowed under this section if the tax year were not a split year, and

(b) that proportion is equal to the proportion that the part of the earnings that is not “excluded” bears to the total earnings.

(7) In this section “taxable earnings” or “net taxable earnings” means taxable earnings or net taxable earnings from the employment for the purposes of Part 2.

Passenger payments

233

(1) No liability to income tax arises in respect of approved passenger payments made to an employee for the use of a car or van (whether or not it is a company vehicle) if—

(a) the employee receives mileage allowance payments for the use of the car or van, and

(b) the cash equivalent of the benefit of the car or van is treated as earnings from the employment by virtue of section 120 or 154 (cars and vans as benefits).

This is subject to subsection (2).

(2) The condition in subsection (1)(b) needs to be met only if the car or van is made available to the employee by reason of the employment.

(3) Passenger payments are amounts paid to an employee because, while using a car or van for business travel, the employee carries in it one or more passengers who are also employees for whom the travel is business travel.

(4) Passenger payments are approved if, or to the extent that, for a tax year, the total amount of all such payments made to the employee does not exceed the approved amount for such payments (see section 234).

(5) Section 117 (when cars and vans are made available by reason of employment) applies for the purposes of subsection (2).

The approved amount for passenger payments

234

(1) The approved amount for passenger payments is—

$$M×R$where—M is the number of miles of business travel by the employee by car or van—(a) for which the employee carries in the tax year in question one or more passengers who are also employees for whom the travel is business travel, and(b) in respect of which passenger payments are made;R is a rate of 5p per mile.$

(2) If the employee carries for all or part of the tax year two or more passengers who are also employees for whom the travel is business travel, the approved amount for passenger payments is the total of the amounts calculated separately under subsection (1) in respect of each of those passengers.

(3) The Treasury may by regulations amend subsection (1) so as to alter the rate.

Supplementary

Vehicles to which this Chapter applies

235

(1) This Chapter applies to cars, vans, motor cycles and cycles.

(2) “Car” means a mechanically propelled road vehicle which is not—

(a) a goods vehicle,

(b) a motor cycle, or

(3) “Van” means a mechanically propelled road vehicle which—

(a) is a goods vehicle, and

(b) has a design weight not exceeding 3,500 kilograms,

and which is not a motor cycle.

(4) “Motor cycle” has the meaning given by section 185(1) of the Road Traffic Act 1988 (c. 52).

(5) “Cycle” has the meaning given by section 192(1) of that Act.

(6) In this section—

“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.

Interpretation of this Chapter

236

(1) In this Chapter—

“business travel” means travelling the expenses of which, if incurred and paid by the employee in question, would (if this Chapter did not apply) be deductible under sections 337 to 342;

“mileage allowance payments” has the meaning given by section 229(2);

“passenger payments” has the meaning given by section 233(3).

(1A) For journeys that are treated as business travel for the purposes of certain provisions of this Chapter, see section 235A (journeys made by members of local authorities etc).

(2) For the purposes of this Chapter a vehicle is a “company vehicle” in a tax year if in that year—

(a) the vehicle is made available to the employee by reason of the employment and is not available for the employee’s private use, or

(b) an amount in respect of the benefit of the vehicle is to be treated as the employee’s earnings for the tax year by virtue of—

(i) section 120 or 120A (benefit of car treated as earnings),

(ii) section 154 or 154A (benefit of van treated as earnings), or

(iii) section 203 or 203A (residual liability to charge: benefit treated as earnings), or

(c) in the case of a car or van, an amount in respect of the benefit of the car or van would be required to be so treated if sections 167 and 168 (exceptions for pooled cars and vans) and section 248A (emergency vehicles) did not apply, or

(d) in the case of a cycle, the cash equivalent of the benefit of the cycle would be required to be treated as the employee’s earnings for the tax year under Chapter 10 of Part 3 (taxable benefits: residual liability to charge) if section 244(1) (exception for cycles made available) did not apply.

(3) Sections 117 and 118 (when cars and vans are made available by reason of employment and are made available for private use) apply for the purposes of subsection (2).

Chapter 3 — Exemptions: other transport, travel and subsistence

Parking provision and expenses

237

(1) No liability to income tax arises in respect of the provision of workplace parking for an employee.

(2) No liability to income tax arises by virtue of the payment or reimbursement of expenses incurred in connection with the provision for or the use by an employee of workplace parking.

(3) In this section “workplace parking” means—

(a) a parking space for a car or van,

(b) a motor cycle parking space, or

at or near the employee’s workplace.

Modest private use of heavy goods vehicles

238

(1) No liability to income tax arises where a heavy goods vehicle is made available to an employee for the employee’s private use if conditions A and B are met.

(2) Condition A is that there is no transfer of the property in the vehicle to the employee.

(3) Condition B is that the employee’s use of the vehicle in the tax year is not wholly or mainly private use.

(4) In this section—

“heavy goods vehicle” means a mechanically propelled road vehicle which—is of a construction primarily suited for the conveyance of goods or burden of any kind, andis designed or adapted to have a maximum weight exceeding 3,500 kilograms when in normal use and travelling on a road laden, and

“private use” means use other than for travel which the employee is necessarily obliged to do in the performance of the duties of the employment.

Payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles

239

(1) No liability to income tax arises in respect of the discharge of any liability of an employee in connection with a taxable car or van or an exempt heavy goods vehicle.

(2) No liability to income tax arises in respect of a payment to an employee in respect of expenses incurred by the employee in connection with a taxable car or van or an exempt heavy goods vehicle.

(3) Subsections (1) and (2) do not apply to liability arising by virtue of section 120A (optional remuneration arrangements: benefit of a car), section 149 or 149A (benefit of car fuel treated as earnings) , section 154A (optional remuneration arrangements: benefit of a van) or section 160 or 160A (benefit of van fuel treated as earnings).

(4) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of a benefit connected with a taxable car or van or an exempt heavy goods vehicle.

(5) Subsection (4) does not apply to the provision of a driver.

(6) For the purposes of this section a car or van is “taxable” if under Chapter 6 of Part 3 an amount (whether the cash equivalent or the relevant amount) in respect of the benefit of it is to be treated as the employee’s earnings for the tax year.

(7) For the purposes of this section—

(a) “heavy goods vehicle” has the same meaning as in section 238(4) (modest private use of heavy goods vehicles), and

(b) a heavy goods vehicle is “exempt” if it is made available in the tax year to the employee in such circumstances that section 238 applies.

(8) For the purposes of subsections (1) and (2), a heavy goods vehicle is also “exempt” if it is so made available in such circumstances that section 238 would apply if the employee were not in lower-paid employment as a minister of religion (see section 290D).

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Incidental overnight expenses and benefits

240

(1) No liability to income tax arises in respect of a sum if or to the extent that it is paid wholly and exclusively for the purpose of paying or reimbursing expenses which—

(a) are incidental to the employee’s absence from the place where the employee normally lives,

(b) relate to a continuous period of such absence in relation to which the overnight stay conditions are met (a “qualifying period”), and

(c) would not be deductible under Part 5 if the employee incurred and paid them and Chapter 2 of this Part (mileage allowances and passenger payments) did not apply.

(2) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of a benefit provided for an employee if—

(a) its provision is incidental to such an absence during a qualifying period, and

(b) no amount would be deductible in respect of it under Part 5.

(3) Subsections (1) and (2) are subject to section 241 (incidental overnight expenses and benefits: overall exemption limit).

(4) The overnight stay conditions are that—

(a) the employee is obliged to stay away from the place where the employee normally lives throughout the period,

(b) the period includes at least one overnight stay away from that place, and

(5) Condition A is that the expenses are deductible under Part 5 (otherwise than under any of the excepted foreign travel provisions) or would be if the employee incurred and paid them and Chapter 2 of this Part did not apply.

(6) Condition B is that the expenses are within section 250 or 255 (exemption of work-related and individual learning account training provision) or would be if the employer paid or reimbursed them.

(7) In this section “excepted foreign travel provisions” means—

(a) section 371 (travel costs and expenses where duties performed abroad: visiting spouse’s civil partner's or child’s travel),

(b) section 374 (non-domiciled employee’s spouse’s civil partner's or child’s travel costs and expenses where duties performed in UK), and

Incidental overnight expenses and benefits: overall exemption limit

241

(1) Section 240(1) and (2) do not apply if the exemption provisions total in respect of the qualifying period in question exceeds the permitted amount.

(2) In this section “the exemption provisions total”, in respect of a period, means the aggregate of—

(a) the amounts that would be exempted under section 240(1) and (2) in respect of the period, apart from this section, and

(b) the amounts that would be exempted under section 268 (exemption of vouchers and tokens for incidental overnight expenses) in respect of the period, apart from the condition in section 268(5).

(3) In this section “the permitted amount”, in respect of a period, means the aggregate of the following amounts—

(a) £5 for each night during the period spent wholly in the United Kingdom, and

(b) £10 for each night during the period spent wholly or partly outside the United Kingdom.

Works transport services

242

(1) No liability to income tax arises in respect of the provision for employees of a works transport service if—

(a) the service is available generally to employees of the employer (or each employer) concerned,

(b) the main use of the service is for qualifying journeys by those employees, and

(i) is used only by the employees for whom it is provided or their children, or

(ii) is substantially used only by those employees or children.

(2) In this section—

“children” includes stepchildren and illegitimate children but does not include children aged 18 or over, and

“works transport service” means a service which is provided by means of a bus or a minibus for conveying employees of one or more employers on qualifying journeys.

(3) For the purposes of this section—

(a) “bus” means a road passenger vehicle which has a seating capacity of 12 or more, and

(b) “minibus” means a vehicle constructed or adapted for the carriage of passengers which has a seating capacity of 9, 10 or 11.

(4) But a vehicle which falls within the definition in subsection (3)(b) is not a minibus for the purposes of this section if—

(a) it has one or more disqualified seats, and

(b) excluding the disqualified seats, it has a seating capacity of 8 or less.

(5) For the purposes of subsections (3) and (4) the seating capacity of a vehicle is determined in the same way as for the purposes of Part 3 of Schedule 1 to VERA 1994 (vehicle excise duty on buses).

This applies whether or not the vehicle is a bus within the meaning of that Part of that Schedule.

(6) For the purposes of subsection (4) a seat is disqualified if relevant construction and use requirements are not met in relation to it.

In this subsection “construction and use requirements” has the same meaning as in Part 2 of the Road Traffic Act 1988 (c. 52) or, in Northern Ireland, Part III of the Road Traffic (Northern Ireland) Order 1995 (S.I. 1995/2994 (N.I. 18)).

Support for public bus services

243

(1) No liability to income tax arises in respect of the provision of financial or other support for a public transport road service if—

(a) in the case of a local bus service, conditions A and B are met, or

(b) in any other case, conditions A to C are met.

(2) Condition A is that the service is used by employees of one or more employers for qualifying journeys.

(3) Condition B is that the service is available generally to employees of the employer (or each employer) concerned.

(4) Condition C is that the terms on which the service is available to the employees of the employer (or each employer) concerned are not more favourable than those available to other passengers.

(5) In this section—

“local bus service” means a local service (as defined in section 2 of the Transport Act 1985 (c. 67)), and

“public transport road service” means a public passenger transport service provided by means of a road vehicle.

Cycles and cyclist’s safety equipment

244

(1) No liability to income tax arises in respect of the provision for an employee of a cycle or cyclist’s safety equipment if conditions A to C are met.

(2) Condition A is that there is no transfer of the property in the cycle or equipment in question.

(3) Condition B is that the employee uses the cycle or equipment in question mainly for qualifying journeys.

(4) Condition C is that cycles are available generally to employees of the employer concerned or, as the case may be, cyclist’s safety equipment is so available to them.

(5) In this section “cycle” has the meaning given by section 192(1) of the Road Traffic Act 1988 (c. 52), and “cyclist” has a corresponding meaning.

Travelling and subsistence during public transport strikes

245

(1) No liability to income tax arises in respect of the following benefits and payments where a strike or other industrial action disrupts a public transport service normally used by an employee.

(2) They are—

(a) the provision for the employee of overnight accommodation at or near the employee’s permanent workplace,

(b) a payment to the employee in respect of expenses incurred by the employee in connection with such accommodation,

(c) the provision for the employee of transport for the purpose of ordinary commuting or travel between any two places that is for practical purposes substantially ordinary commuting, and

(d) a payment to the employee in respect of expenses incurred on such transport.

Transport between work and home for disabled employees: general

246

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

(a) the provision of transport for a disabled employee, or

(b) the payment or reimbursement of expenses incurred on such transport,

if the condition in subsection (2) is met.

(2) The condition is that the transport is provided or the expenses are incurred for the purpose of ordinary commuting or travel between any two places that is for practical purposes substantially ordinary commuting.

(3) Subsection (1) does not apply in a case where a car is made available to a disabled employee (but see section 247).

(4) In this section “disabled employee” means an employee who has a physical or mental impairment with a substantial and long-term adverse effect on the employee’s ability to carry out normal day to day activities.

Provision of cars for disabled employees

247

(1) This section applies where a car is made available to a disabled employee without any transfer of the property in it.

(2) No liability to income tax arises by virtue of Chapter 6 or 10 of Part 3 (taxable benefits: cars, vans etc. and residual liability to charge) in respect of the benefit if conditions A to C are met.

(3) No liability to income tax arises in respect of—

(a) the provision of fuel for the car, or

(b) the payment or reimbursement of expenses incurred in connection with it,

if conditions A to C are met.

(4) Condition A is that the car has been adapted for the employee’s special needs or, in the case of an employee who because of disability can only drive a car that has automatic transmission, it is such a car.

(5) Condition B is that the car is made available on terms prohibiting its use otherwise than for—

(a) the employee’s business travel, or

(b) transport for the employee for the purpose of—

(i) ordinary commuting or travel between any two places that is for practical purposes substantially ordinary commuting, or

(ii) travel to a place the expenses of travelling to which would be within one of the training exemption provisions if the employer paid them.

(6) Condition C is that in the tax year the car is only used in accordance with those terms.

(7) In this section—

“business travel” has the same meaning as in Chapter 6 of Part 3 (taxable benefits: cars, vans and related benefits) (see section 171(1)),

“disabled employee” has the same meaning as in section 246 (see subsection (4)), and

“the training exemption provisions” means—

section 250 (exemption of work-related training provision),

section 255 (exemption for contributions to individual learning account training), and

section 311 (retraining courses).

(8) Section 138(4) (when a car has automatic transmission) applies for the purposes of this section as it applies for the purposes of section 138.

248

(1) No liability to income tax arises in respect of the provision of transport or the payment or reimbursement of expenses incurred on transport if—

(a) the transport is for a journey from the employee’s workplace to the employee’s home,

(b) the late working conditions or the car-sharing failure conditions are met, and

(c) the number of previous occasions in the tax year on which the provision of transport within this section or the payment or reimbursement of expenses within this section has occurred is lower than 60.

(2) The late working conditions are that—

(a) the journey is made on an occasion when the employee is required to work later than usual and until at least 9 p.m.,

(b) such occasions occur irregularly,

(i) public transport has ceased to be available for the journey, or

(ii) it would not be reasonable to expect the employee to use it, and

(d) the transport is by taxi or similar private road transport.

(3) The car-sharing failure conditions are that—

(a) the employee regularly travels to work in a car with one or more other employees of the employee’s employer under arrangements for the sharing of the car with them, and

(b) the journey is made on an occasion when the employee is unable to use the car because of unforeseen and exceptional circumstances.

Interpretation of this Chapter

249

In this Chapter—

“car” and “van” have the same meaning as in Chapter 6 of Part 3 (taxable benefits: cars, vans and related benefits) (see section 115), except that for the purposes of sections 246 and 247 (transport for the disabled) any adaptation of a car for the employee’s special needs is to be disregarded,

“ordinary commuting” has the same meaning as in section 338 (travel for necessary attendance) (see subsection (3)),

“qualifying journey”, in relation to an employee, means the whole or part of a journey—between the employee’s home and workplace,between one workplace and another,in connection with the performance of the duties of the employment, and

“workplace” and “permanent workplace” have the meaning given by section 339.

Chapter 4 — Exemptions: education and training

250

(1) No liability to income tax arises by virtue of—

(a) the provision for an employee of work-related training or any benefit incidental to such training, or

(b) the payment or reimbursement to or in respect of an employee of—

(i) the cost of work-related training or of any benefit incidental to such training, or

(ii) any costs of a kind specified in subsection (2) in respect of such training.

(2) The costs are—

(a) costs which are incidental to the employee undertaking the training,

(b) expenses incurred in connection with an examination or other assessment of what the employee has gained from the training, and

(c) the cost of obtaining any qualification, registration or award to which the employee becomes or may become entitled as a result of the training or such an examination or other assessment.

251

(1) In this Chapter “work-related training”, in relation to an employee, means a training course or other activity designed to impart, instil, improve or reinforce any knowledge, skills or personal qualities which—

(a) are likely to prove useful to the employee when performing the duties of the employment or a related employment, or

(b) will qualify or better qualify the employee—

(i) to perform those duties, or

(ii) to participate in any charitable or voluntary activities that are available to be performed in association with the employment or a related employment.

(2) For this purpose “related employment”, in relation to an employee, means another employment with the same employer, or with a person connected with the employer, which the employee—

(a) is to hold,

(b) has a serious opportunity of holding, or

Exception for non-deductible travel expenses

252

(1) Where travel or subsistence is provided or the costs of travel or subsistence are paid or reimbursed, section 250 does not apply except to the extent that the travel meets condition A or B or the subsistence meets condition B.

(2) Condition A is that, on the assumptions in subsection (4), mileage allowance relief under Chapter 2 of this Part would be available for the travel if no mileage allowance payments had been made.

(3) Condition B is that, on those assumptions, the expenses of the travel or subsistence would be deductible under Part 5.

(4) The assumptions are—

(a) that the employee undertook the training as one of the duties of the employment, and

(b) that the employee incurred and paid the expenses.

(5) In this section—

“mileage allowance payments” has the meaning given by section 229(2), and

“subsistence” includes food, drink and temporary living accommodation.

Exception where provision for excluded purposes

253

(1) Section 250 does not apply if or to the extent that the facilities or other benefits that are provided or the costs of which are paid or reimbursed are provided to the employee for one or more of the following purposes.

(2) They are—

(a) enabling the employee to enjoy the facilities or benefits for entertainment or recreational purposes which are unconnected,

(b) providing the employee with an unconnected inducement to remain in or accept an employment with the employer or a person connected with the employer, and

(3) In subsection (2)(a) the reference to enjoying facilities or benefits for entertainment or recreational purposes includes a reference to enjoying them in the course of a leisure activity.

(4) In subsection (2)(a) and (b) “unconnected” means unconnected with imparting, instilling, improving or reinforcing knowledge, skills or personal qualities within section 251(1).

Exception where unrelated assets are provided

254

(1) Section 250 does not apply if the benefit that is provided or the cost of which is paid or reimbursed is, or is the use of, an asset that is not a training-related asset.

(2) “Training-related asset”, in relation to work-related training provided to an employee, means—

(a) an asset provided for use only—

(i) in the course of the training, or

(ii) in the course of the training and in the performance of the duties of the employee’s employment,

(b) training materials provided in the course of the training, or

(3) For this purpose, “training materials” includes stationery, books or other written material, audio or video tapes, compact disks or floppy disks.

Individual learning account training

Exemption for contributions to individual learning account training

255

(1) No liability to income tax in respect of income from a current or former employment arises by virtue of—

(a) the provision to a person within subsection (2) (“the employee”) of individual learning account training that is given by a person who is not the employee’s employer or former employer,

(b) any payment to the person giving the training in respect of the cost of that provision,

(d) the payment or reimbursement of any costs in respect of such training of a kind specified in subsection (3).

(2) A person is within this subsection if the person either—

(a) holds an account that qualifies under section 104 of the Learning and Skills Act 2000 (c. 21), or

(b) is a party to arrangements that qualify under section 105 or 106 of that Act or section 2 of the Education and Training (Scotland) Act 2000 (asp. 8).

(3) The costs are—

(a) costs which are incidental to the employee undertaking the training,

(b) expenses incurred in connection with an examination or other assessment of what the employee has gained from the training, and

(c) the cost of obtaining any qualification, registration or award to which the employee becomes or may become entitled as a result of the training or such an examination or other assessment.

Meaning of “individual learning account training”

256

In this Chapter “individual learning account training” means training or education of a kind that qualifies for grants authorised by—

(a) regulations under section 108 or 109 of the Learning and Skills Act 2000 (c. 21), or

(b) regulations under section 1 of the Education and Training (Scotland) Act 2000.

Exception for non-deductible travel expenses

257

(1) Where travel or subsistence is provided or the costs of travel or subsistence are paid or reimbursed, section 255 does not apply except to the extent that the travel meets condition A or B or the subsistence meets condition B.

(2) Condition A is that, on the assumptions in subsection (4), mileage allowance relief under Chapter 2 of this Part would be available for the travel if no mileage allowance payments had been made.

(3) Condition B is that, on those assumptions, the expenses of the travel or subsistence would be deductible under Part 5.

(4) The assumptions are—

(a) that the employee undertook the training as one of the duties of the employment, and

(b) that the employee incurred and paid the expenses.

(5) In this section—

“mileage allowance payments” has the meaning given by section 229(2), and

“subsistence” includes food, drink and temporary living accommodation.

Exception where provision for excluded purposes

258

(1) Section 255 does not apply if or to the extent that the facilities or other benefits that are provided or made available, or the costs of which are paid or reimbursed, are provided or made available for either or both of the following purposes.

(2) They are—

(a) enabling the employee or former employee to enjoy the facilities or benefits for entertainment or recreational purposes, and

(b) rewarding the employee or former employee for performing duties of the employment or former employment or performing them in a particular way.

(3) In subsection (2)(a) the reference to enjoying facilities or benefits for entertainment or recreational purposes includes a reference to enjoying them in the course of a leisure activity.

Exception where unrelated assets are provided

259

(1) Section 255 does not apply if the benefit that is provided, or the use of which is provided, or the cost of which is paid or reimbursed is an asset that is not a training-related asset.

(2) “Training-related asset”, in relation to individual learning account training provided to an employee or former employee, means—

(a) an asset provided—

(i) for use only in the course of the training, or

(ii) for use in the course of the training and in the performance of the duties of the employee’s employment, but not to any significant extent for any other use, or

(b) training materials provided in the course of the training, or

(c) something made by the employee or former employee in the course of the training or incorporated into something so made.

(3) For this purpose “training materials” includes stationery, books or other written material, audio or video tapes, compact disks or floppy disks.

Exception where training not generally available to staff

260

(1) Section 255(1) only applies if any expenditure involved in making the provision, the payment or the reimbursement is incurred in giving effect to existing arrangements providing—

(a) for the person incurring it to contribute to costs arising from the undertaking of individual learning account training by the employer’s employees or former employees, and

(b) for such contributions to be generally available, on similar terms, to the employer’s employees at that time.

(2) In subsection (1) “existing arrangements” means arrangements in place when the agreement to incur the expenditure was made.

(3) The Treasury may by regulations make provision specifying the persons or other entities under whom Crown servants are to be treated for the purposes of this section as holding employment.

(4) Such regulations may—

(a) treat a description of Crown servants (or two or more such descriptions taken together) as an entity for the purposes of the regulations, and

(b) make different provision for different descriptions of Crown servants.

(5) In this section “Crown servant” means a person holding an employment under the Crown.

Chapter 5 — Exemptions: recreational benefits

Recreational facilities

Exemption of recreational benefits

261

(1) No liability to income tax arises in respect of the provision to an employee or a member of an employee’s family or household of benefits within subsection (2).

(2) The benefits are—

(a) sporting or other recreational facilities which meet conditions A to C, and

(b) a right or opportunity to make use of such facilities.

This is subject to section 262.

(3) Condition A is that the facilities are available generally to the employees of the employer in question.

(4) Condition B is that they are not available to members of the public generally.

(5) Condition C is that they are used wholly or mainly by persons whose right or opportunity to use them is employment-related (whether or not by reference to the same employer).

(6) A person’s right or opportunity to use facilities is “employment-related” if and only if—

(a) it derives from the person being—

(i) an employee or former employee, or

(ii) a member or former member of the family or household of an employee or former employee,

of a particular employer, and

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

Benefits not exempted by section 261

262

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

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

(i) a mechanically propelled vehicle,

(ii) holiday or other overnight accommodation, or

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

(b) facilities provided on domestic premises, or

(2) In this section—

“domestic premises” means—premises used wholly or mainly as a private dwelling, orland or other premises belonging to, or enjoyed with, premises so used, and

“vehicle” includes a ship, boat or other vessel, an aircraft and a hovercraft.

Power to alter benefits to which section 261 applies

263

The Treasury may by regulations provide that section 261—

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

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

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

(ii) a benefit within section 262.

Annual parties and functions

264

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

(2) Where in the tax year only one annual party or similar annual function to which this section applies is provided for the employer’s employees, or the employees in question, no liability to income tax arises in respect of its provision if the cost per head of the party or function does not exceed £150.

(3) Where in the tax year two or more such parties or functions are so provided, no liability to income tax arises in respect of the provision of one or more of them (“the exempt party or parties”) if the cost per head of the exempt party or parties does not exceed £150 or £150 in aggregate.

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

(a) the party or function, and

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

divided by the number of those persons.

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

Entertainment

Third party entertainment

265

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

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

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

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

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

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

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

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

General exemptions: use for exempt benefits

Exemption of non-cash vouchers for exempt benefits

266

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

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

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

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

(e) section 265 (third party entertainment), or

(f) section 320C (recommended medical treatment);

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

(a) section 242 (works transport services),

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

(d) section 319 (mobile telephones).

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

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

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

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

(e) section 317 (subsidised meals) , ...

(f) section 320A (eye tests and special corrective appliances) or

(g) section 320B (health screening and medical check-ups).

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

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

Exemption of credit-tokens used for exempt benefits

267

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

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

(b) would do so if the employee were not in lower-paid employment as a minister of religion.

(2) Those provisions are—

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

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

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

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

(f) section 265 (third party entertainment).

(g) section 319 (mobile telephones). , ...

(h) section 320A (eye tests and special corrective appliances) and

(i) section 320B (health screening and medical check-ups).

Exemptions for particular non-cash vouchers and credit-tokens

Exemption of vouchers and tokens for incidental overnight expenses

268

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

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

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

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

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

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

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

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

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

(6) In this section—

“the overnight stay conditions” has the same meaning as in section 240 (exemption of incidental overnight expenses and benefits) (see section 240(4)), and

“the exemption provisions total” and “the permitted amount” have the same meaning as in section 241 (incidental overnight expenses and benefits: overall exemption limit) (see section 241(2) and (3)).

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

269

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

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

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

(2) Subsection (1) applies where the goods in question are fuel for a car, or van, but see section 149(3) or section 160(3) (by virtue of which such use of a voucher or token is treated as the provision of the fuel for the purposes of section 149 (benefit of car fuel treated as earnings) or section 160 (benefit of van fuel treated as earnings)).

(3) For the purposes of this section—

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

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

(4) For the purposes of this section—

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

(b) a heavy goods vehicle is “exempt” if it is made available in the tax year to the employee in such circumstances that section 238 applies or would apply if the employee were not in lower-paid employment as a minister of religion.

Exemption for small gifts of vouchers and tokens from third parties

270

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

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

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

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

Chapter 7 — Exemptions: removal benefits and expenses

Exemption of removal benefits and expenses: general

Limited exemption of removal benefits and expenses: general

271

(1) No liability to income tax in respect of earnings or by virtue of Part 7A arises by virtue of—

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

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

(2) In relation to earnings, subsection (1) does not apply if (disregarding this section) the earnings are general earnings to which either of the following sections applies—

(a) section 22 (chargeable overseas earnings for year when remittance basis applied and employee outside section 26 ), or

(b) section 26 (foreign earnings for year when remittance basis applied and employee met section 26A requirement ).

(2A) In relation to Part 7A, subsection (1) does not apply to any amount so far as the amount (disregarding this section and section 554P) would count as employment income to which section 554Z9 or 554Z10 would apply.

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

Removal benefits and expenses to which section 271 applies

272

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

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

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

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

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

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

(iv) section 280 (transporting belongings),

(v) section 281 (travelling and subsistence),

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

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

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

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

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

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

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

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

Conditions applicable to change of residence

273

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

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

(a) the employee becoming employed,

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

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

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

Meaning of “the limitation day”

274

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

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

Meaning of “the employment change”

275

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

Meaning of “residence”, “former residence” and “new residence” etc.

276

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

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

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

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

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

Benefits and expenses within this Chapter

Acquisition benefits and expenses

277

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

(a) the employee,

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

(2) The following benefits are within this section—

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

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

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

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

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

(3) The following expenses are within this section—

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

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

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

(e) stamp duty or stamp duty land tax charged on the acquisition.

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

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

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

(5) In this section—

“appropriate registry” means—Her Majesty’s Land Registry,the Land Registry in Northern Ireland, orthe Registry of Deeds for Northern Ireland, and

“appropriate register” means any register under the management and control of the Keeper of the Registers of Scotland.

Abortive acquisition benefits and expenses

278

Benefits or expenses are within this section if—

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

(b) the interest is not acquired—

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

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

Disposal benefits and expenses

279

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

(2) The following benefits are within this section—

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

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

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

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

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

(3) The following expenses are within this section—

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

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

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

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

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

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

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

(5) A loan is a “related loan” for this purpose if—

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

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

Transporting belongings

280

(1) The following benefits are within this section—

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

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

(2) The following expenses are within this section—

(a) expenses connected with such transportation, and

(b) the costs of any such insurance.

(3) In this section—

“domestic belongings” means belongings of the employee or of members of the employee’s family or household, and

“transportation” includes—packing and unpacking belongings,temporarily storing them, where there is not a direct move from the former to the new residence,detaching domestic fittings from the former residence, where they are to be taken to the new residence, andattaching domestic fittings to the new residence and adapting them, where they are brought from the former residence.

Travelling and subsistence

281

(1) The following benefits are within this section—

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

(b) any other subsistence provided for the employee,

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

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

(iii) temporary living accommodation of the employee,

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

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

(ii) temporary living accommodation of the employee,

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

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

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

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

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

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

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

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

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

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

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

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

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

(6) In this section—

“new duties” means—if the employment change is within section 273(2)(a) (change of employer), the duties of the employee’s new employment, andif the employment change is within section 273(2)(b) (change of duties), the new duties of the employment,

“former area” means the area round or near the former residence of the employee,

“new area” means—if the employment change is within section 273(2)(a) or (b) (change of employer or duties), the area round or near the place where the employee’s new duties normally are or are to be performed, andif the employment change is within section 273(2)(c) (change of place of performance), the area round or near the new place where the duties of the employee’s employment normally are or are to be performed,

“relevant child” means a person who is a member of the employee’s family or household and is aged under 19 at the beginning of the tax year in which the employment change occurs, and

“subsistence” means food, drink and temporary living accommodation.

Exclusion from section 281 of benefits and expenses where deduction allowed

282

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

(2) They are—

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

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

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

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

Exclusion from section 281 of taxable car and van facilities

283

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

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

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

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

(a) section 115 (meaning of “car” and “van”),

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

Bridging loan expenses

284

(1) Expenses are within this section if—

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

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

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

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

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

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

(b) for redeeming a loan—

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

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

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

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

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

(5) The appropriate fraction is—

$MVL$

or, if it is smaller—

$$PLL$where—MV is the market value of the employee’s interest in the former residence at the time of acquisition of the new residence,PL is the part of the loan used for purposes within subsection (2), andL is the amount of the loan.$

(6) In this section—

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

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

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

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

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

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

Replacement of domestic goods

285

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

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

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

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

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

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

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

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

Power to amend sections 279 to 285

286

(1) The Treasury may by regulations amend sections 277 to 285 so as to secure that benefits or expenses which would not otherwise fall within any of those sections do so.

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

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

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

Limit on exemption

287

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

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

(a) the section 62 earnings, ...

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

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

(4) In this section “the benefits code earnings” means all earnings—

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

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

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

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

(6) In this section “the Part 7A employment income” means the amount in respect of which section 271 (when read with section 554P) would prevent liability to income tax arising if this section were to be disregarded.

Special exemption and relief for bridging loans

Limited exemption of certain bridging loans connected with employment moves

288

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

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

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

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

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

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

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

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

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

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

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

and for those purposes that excess is “the unused exemption”.

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

$$AB×C×365$where—A is the unused exemption,B is the maximum amount of the loan outstanding in the period beginning with the time when the loan is made and ending with the limitation day, andC is the official rate of interest in force when the loan is made (expressed as a percentage).$

(5) In this section—

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

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

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

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

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

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

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

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

289

(1) This subsection applies to a loan if—

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

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

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

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

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

Chapter 8 — Exemptions: special kinds of employees

Ministers of religion

Accommodation benefits of ministers of religion

290

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

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

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

(2) No liability to income tax in respect of a person employed as a full-time minister arises by virtue of the payment or reimbursement of expenses incurred in connection with providing living accommodation in qualifying premises if the employment is lower-paid employment as a minister of religion (see section 290D).

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

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

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

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

(5) In this section—

“full-time minister” means a person in full-time employment as a minister of a religious denomination,

“statutory amount” means an amount paid in pursuance of a provision in, or having the force of, an Act, and

“statutory deduction” means a deduction made in pursuance of such a provision.

MPs, government ministers etc.

Termination payments to MPs and others ceasing to hold office

291

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

(2) This section applies to grants and payments—

(a) made under section 5(1) of the Parliamentary Standards Act 2009 in connection with a person's ceasing to be a member of the House of Commons,

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

(c) made under section 3 of the European Parliament (Pay and Pensions) Act 1979 (c. 50) (resettlement grants for persons ceasing to be Representatives), or under Article 13 of the Statute for Members of the European Parliament (transitional allowances),

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

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

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

(e) made under section 20(3) of the Government of Wales Act 2006 to a person—

(i) ceasing to be a member of the National Assembly for Wales; or

(ii) ceasing to hold office as the Presiding Officer, Deputy Presiding Officer, or such other office in connection with the Assembly as the Assembly may determine, but continuing to be an Assembly Member,

(ea) made under section 53(3) of the Government of Wales Act 2006 to a person ceasing to be a member of the Welsh Assembly Government...

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

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

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

(g) made under section 26A of the Greater London Authority Act 1999 (payments on ceasing to hold office as Mayor of London or as a member of the London Assembly).

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

Overnight expenses allowances of MPs

292

(1) No liability to income tax arises in respect of a payment made to a member of the House of Commons under section 5(1) of the Parliamentary Standards Act 2009 if the payment is—

(a) expressed to be made in respect of accommodation expenses, or

(b) related to or in consequence of a payment expressed to be so made.

(2) “Accommodation expenses” means expenses necessarily incurred on overnight accommodation that is required for the performance of the member's parliamentary duties in or about the Palace of Westminster or the member's constituency.

(3) But the cost of an overnight stay in a hotel that was required only because, on that night, the member had been required to be at the House of Commons because the House was sitting late does not count as accommodation expenses for the purposes of this section, unless the member had been required to be at the House because it was sitting beyond 1 a.m.

(4) Subsection (1) does not apply to a loan for a deposit payable at the commencement of a tenancy.

(5) The reference in subsection (1) to a payment made to a member of the House of Commons under section 5(1) of the Parliamentary Standards Act 2009 includes a payment made under that section to another person at the direction of a member (see section 6(7) of that Act).

Overnight expenses of other elected representatives

293

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

(2) This section applies to payments—

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

(b) made to members of the National Assembly for Wales under section 20(2) of the Government of Wales Act 2006 or to a member of the Welsh Assembly Government under section 53(2) of that Act, or

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

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

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

EU travel expenses of MPs and other representatives

294

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

(a) a member of the House of Commons under section 5(1) of the Parliamentary Standards Act 2009,

(b) a member of the Scottish Parliament under section 81(2) of the Scotland Act 1998,

(c) a member of the National Assembly for Wales under section 20(2) of the Government of Wales Act 2006 or a member of the Welsh Assembly Government under section 53(2) of that Act, or

(d) a member of the Northern Ireland Assembly under section 47(2) of the Northern Ireland Act 1998,

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

(2) “European travel expenses” means the cost of, and any additional expenses incurred in, travelling between the United Kingdom and a relevant European location.

(3) “Relevant European location” means—

(a) a European Union institution or agency, or

(b) the national parliament of—

(i) another member State,

(ii) a candidate or applicant country, or

(iii) any other country that is a member of the Council of Europe.

(4) The Treasury may by order amend subsection (3) by—

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Income Tax (Earnings and Pensions) Act 2003

Mileage allowance relief

231

Giving effect to mileage allowance relief

232

Passenger payments

Passenger payments

233

The approved amount for passenger payments

234

Supplementary

Vehicles to which this Chapter applies

235

Interpretation of this Chapter

236

Chapter 3 — Exemptions: other transport, travel and subsistence

Parking provision and expenses

237

Modest private use of heavy goods vehicles

238

Payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles

239

Incidental overnight expenses and benefits

240

Incidental overnight expenses and benefits: overall exemption limit

241

Works transport services

242

Support for public bus services

243

Cycles and cyclist’s safety equipment

244

Travelling and subsistence during public transport strikes

245

Transport between work and home for disabled employees: general

246

Provision of cars for disabled employees

247

Transport home: late night working and failure of car-sharing arrangements

248

Interpretation of this Chapter

249

Chapter 4 — Exemptions: education and training

Work-related training

Exemption of work-related training provision

250

Meaning of “work-related training”

251

Exception for non-deductible travel expenses

252

Exception where provision for excluded purposes

253

Exception where unrelated assets are provided

254

Individual learning account training

Exemption for contributions to individual learning account training

255

Meaning of “individual learning account training”

256

Exception for non-deductible travel expenses

257

Exception where provision for excluded purposes

258

Exception where unrelated assets are provided

259

Exception where training not generally available to staff

260

Chapter 5 — Exemptions: recreational benefits

Recreational facilities

Exemption of recreational benefits

261

Benefits not exempted by section 261

262

Power to alter benefits to which section 261 applies

263

Annual parties and functions

Annual parties and functions

264

Entertainment

Third party entertainment