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Income Tax (Earnings and Pensions) Act 2003

Chapter 3: Exemptions: other transport, travel and subsistence
Section 237: Parking provision and expenses

971.This section derives from the provisions in sections 197A and 155(1A) of ICTA, which provide an exemption from tax in respect of the provision of car parking, and the equivalent provisions for motor cycle parking and facilities for parking bicycles in section 49(2) of FA 1999. It only applies to parking places at the place of work. In this section the defined expression “workplace” has been used instead of “place of work”. See Note 29 in Annex 2.

972.There are definitions of “motor cycle” and “cycle” in section 49(3) of FA 1999. But there is no definition of “car” in sections 155(1A) or 197A of ICTA. As the subject of the exemption is a parking space, definitions of what might be put in it did not appear to add anything, so they have not been reproduced here.

Section 238: Modest private use of heavy goods vehicles

973.This section derives from section 159AC of ICTA which prevents a benefit being chargeable where there is modest private use of a heavy goods vehicle. The exemption here goes wider and provides for no liability to income tax however that liability may arise. See Change 41 in Annex 1.

974.The exemptions in section 159AC(2)(b), (3)(a) and (3)(c) of ICTA, dealing with expenses in connection with the vehicle, are dealt with in section 239.

Section 239: Payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles

975.When an employee is chargeable to tax under the provisions in Chapter 6 of Part 3 in respect of a car or van that charge is intended to cover all the expenses in connection with the vehicle, other than the provision of a driver and, in relation to a car, of fuel. Subsections (1), (2) and (4) of this section provide various exemptions from tax. They derive from sections 157(3) and 159AA(3) of ICTA.Subsection (3) preserves the charge for car fuel.

976.If a heavy goods vehicle, which is not used wholly or mainly for private use, is exempted from the Chapter 6 of Part 3 charge by section 238 it is also exempt in respect of expenses connected with it. This rule derives from section 159AC(3) of ICTA.

977.As exemptions for all types of vehicle are expressed in the same terms in ICTA, they have been brought together in this section as a single exemption. Furthermore, the exemptions have been widened so that they now apply however the liability may arise. See Change 42 in Annex 1. The use of “taxable” car or van, and “exempt” heavy goods vehicle are labels to assist in identifying the basis on which the exemption is due.

978.In the source legislation, the exemption for the discharge of liability and certain expense payments in connection with an exempt heavy goods vehicle only applies in a case where there would otherwise have been a charge to tax under Chapter II of Part V of ICTA – applicable only to employees earning £8,500 or more and directors. In subsection (8), the exemption has been extended to employees in “excluded employment”. See Change 43 in Annex 1.

Section 240: Incidental overnight expenses and benefits

979.This section sets out the exemption for incidental overnight expenses. In so far as it relates to earnings and as expenses it derives from section 200A of ICTA. The exemption from a charge to tax under the benefits code derives from section  155(1B) of ICTA.

980.In the source legislation, sums paid by way of incidental overnight expenses are not eligible for the exemption in if the employee is already allowed a deduction under one of the provisions listed in section 200A(1)(b) of ICTA. That list includes all the provisions under which a deduction may be available. However, the approach in ICTA of listing all the references is long-winded and not necessarily easy to follow. It is simpler to say in subsections (1)(c) and (2)(b) “would not be deductible under Part 5”. This substitution of a general reference is analysed in Change 44 in Annex 1.

981.In subsection (1)(b) a new label of “the overnight stay conditions” has been used to describe the conditions which have to be satisfied in identifying a “qualifying period”. Those conditions are explained in subsection (4).

982.Subsection (2) exempts the charge on benefits under Chapter 10 of Part 3 where relief for the cost of the benefit could not be obtained under section 365, if the employee had paid for it. Subsection (2) derives from section 155(1B) of ICTA.

983.In setting out the condition about deductibility of travelling costs, section 200A(3)(b)(i) of ICTA contains a list of deduction provisions which are regarded as satisfying the test. In line with the simplification above, subsection (5) replaces this list and instead refers to expenses “deductible under Part 5 (otherwise than under any of the excepted foreign travel provisions)”. The “excepted foreign travel provisions” are listed in subsection (7).

Section 241: Incidental overnight expenses and benefits: overall exemption limit

984.The exemption for incidental overnight expenses in section 240 is a limited exemption. This section sets out the limit on the exemption and how it is applied and mainly derives from section 200A(2), (4) and (5) of ICTA. The cap on the exemption applies to the sum of the expenses and benefits exempted under section 240 and the amount exempted for non-cash vouchers and credit-tokens under section 268. The label “the exemption provisions total” in subsection (2) is used to refer to the aggregate total eligible for exemption under both of these sections.

985.Subsection (3) sets out “the permitted amount” for each qualifying period. The “permitted amount” is a new label for the amount described as the “authorised maximum” in section 200A(4) of ICTA.

Section 242: Works transport services

986.This section rewrites most of section 197AA of ICTA as extended by section 60 of FA 2001. That provision excludes from the charge to tax under section 154 the benefit arising from the provision of a works bus or minibus service for employees. This section goes wider and provides for no liability to income tax. See Change 45 in Annex 1.

987.The definitions of “qualifying journey” and “workplace” in section 197AA(3) and (7) have been taken to a new interpretative section, section 249, which applies to the whole Chapter. The definition of “qualifying journey” reflects the amendment to section 197AB of ICTA (support for public transport bus services) made by section 33 of FA 2002. It will enable bus and minibus journeys which start or end at pick-up points to qualify.

988.The only part of section 197AA of ICTA that has not been rewritten in this section is subsection (6). This deals with the exemption from the charge to tax under section 141 of ICTA (non-cash vouchers) where the employee is given a non-cash voucher to evidence entitlement to use the works transport service. That exemption is covered in section 266.

Section 243: Support for public bus services

989.This section derives from section 197AB of ICTA. That section excludes from the charge under section 154 the benefit arising from any financial or other support provided by one or more employers for a public bus service that their employees use for journeys to and from the workplace, or between workplaces. The section takes into account the amendments made by section 33 of FA 2002. Certain definitions are now in section 249. In providing for no liability to income tax the exemption in ICTA has been widened in the same way as in section 242. See Change 46 in Annex 1.

Section 244: Cycles and cyclist’s safety equipment

990.This section derives from section 197AC of ICTA. This prevents an employee being chargeable to income tax under section 154 in respect of the provision of a cycle or associated safety equipment. The part of section 197AC dealing with the provision of a voucher entitling the employee to use a cycle or safety equipment is covered in section 266.

991.The exception only applies where the employer provides the cycle or safety equipment for the employee’s use rather than transferring it to him. If the cycle or equipment is given to the employee to keep, the benefit arising is still chargeable to tax in the normal way.

992.The definition of “qualifying journey” in section 197AB(4) of ICTA has been taken to a new interpretative section, section 249, and in doing so has been extended by adopting the amendment to section 197AB made by section 33 of FA 2002.

993.Section 197AC(6) of ICTA includes an interpretation of “employment”. This has not been rewritten because the extension of the term to include “offices” is dealt with in section 5.

Section 245: Travelling and subsistence during public transport strikes

994.This section derives from ESC A58. It exempts payments and benefits in respect of travelling and subsistence when there is a disruption in public transport. Legislating the concession is a minor change to the law. See Change 47 in Annex 1.

995.In the normal way when the employer pays the cost of, or provides transport for, “ordinary commuting” it would in most cases be chargeable to tax and no deduction would be allowed. Nor would deductions be allowed for accommodation and subsistence paid for or provided near to the permanent workplace. This section provides an exemption for payments and benefits provided to employees to ensure they are able to get to work when there is a public transport strike.

996.If the employee is working at a temporary workplace, or on a training course, the provision of transport, accommodation and subsistence is not exempt, but a deduction is allowed under Part 5.

Section 246: Transport between work and home for disabled employees: general

997.This and the following section derive from ESC A59 and some practice as published in the Inland Revenue guidance manuals. Legislating the concession is a minor change to the law. See Change 48 in Annex 1.

998.The section provides a complete exemption from income tax where an employer provides help with home to work commuting for a disabled employee, except where a car is provided. No special mention of travelling to training is necessary because such travelling (except where it is in substance “ordinary commuting” eg when the training is held at the normal workplace) is exempt for everyone. Where that example involves a disabled employee this section provides an exemption.

Section 247: Provision of cars for disabled employees

999.This section also derives from ESC A59 and established Inland Revenue practice and concerns cases where a car is provided for a disabled employee. Legislating the concession and practice is a minor change to the law. See Change 48 in Annex 1.

Section 248: Transport home: late night working and failure of car-sharing arrangements

1000.This section derives from ESC A66. It grants an exemption from income tax in the cases of exceptional late night working and the failure of car-sharing arrangements. Legislating the concession is a minor change to the law. See Change 49 in Annex 1.

1001.The concession is limited to 60 occasions overall in the tax year. For each occasion after the sixtieth there is liability in the normal way.

1002.The journeys concerned are from work to home only. The term “ordinary commuting” cannot be used as this would include journeys from home to work.

1003.The conditions for the exemption require judgements about when it is “not…reasonable to expect” an employee to use public transport – subsection (2)(c)(ii), and what are “unforeseen and exceptional circumstances” in subsection (3)(b). It is not possible to define these questions of judgement further.

Section 249: Interpretation of this Chapter

1004.This section brings together definitions which apply to several provisions in this Chapter. The definition of “qualifying journey” has been extended by the addition of the words “the whole or part of” as made by section 33 of FA 2002 in relation to section 197AB of ICTA (support for public transport bus services). Adopting this extended definition in sections 242 and 244 is a minor change to the law. See Change 50 in Annex 1.

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