Chapter 3: Deductions from benefits code earnings
Overview
1574.The sections in this Chapter allow deductions where goods or services are provided which are within the scope of the benefits code and deductions would have been allowed if the goods or services had been paid for by the employee. The sections derive from sections 141(3), 142(2), 145(3) and 156(8) of ICTA.
1575.All the sections in the Chapter refer to deductions under the whole of Chapter 2 and Chapter 5 of this Part instead of restricting them to the rewritten versions of the provisions referred to in sections 141(3), 142(2), 145(3) and 156(8) of ICTA. See Change 99 in Annex 1.
Section 361: Scope of this Chapter: cost of benefits deductible as if paid by employee
1576.This section sets out the general proposition for a deduction to be allowed under this Chapter. A person’s earnings must include an amount treated as earnings under the relevant parts of the benefits code and a deduction must have been allowable if the employee had paid the cost of the goods or services. The sections in this Chapter are a change in approach to provisions from which they are derived. The changes in sections 362, 363, 364 and 365 are explained in detail in Changes 98 and 99 in Annex 1.
Section 362: Deductions where non-cash voucher provided
1577.This section applies where goods or services are obtained by an employee in exchange for a non-cash voucher for which an amount is treated as earnings by virtue of section 87(1). It derives from section 141(3) of ICTA. If, had the goods or services been provided by the employee, a deduction would be allowable by the provisions of Chapter 2 or 5 of this Part a deduction is allowable by virtue of this section.
1578.Subsection (1) sets out the conditions which must apply if a deduction from earnings is to be allowed.
1579.Subsection (2) quantifies the amount of the deduction. A limit is placed on the amount of the deduction allowed rather than providing the deduction is only to be set against the amount treated as earnings.
Section 363: Deductions where credit-token provided
1580.This section applies where goods or services are provided using a credit-token. A deduction may be allowed where the earnings include an amount treated as earnings under section 94(1) and the token is used to obtain goods or services. If the employee would have been allowed a deduction under Chapter 2 or Chapter 5 of this Part if he had paid for the goods or services, a deduction is allowed by this section.
1581.Subsection (1) sets out the conditions which must apply if a deduction from earnings is to be allowed.
1582.Subsection (2) quantifies the amount of the deduction, with the same limit as described for section 362.
1583.The section derives from section 142(2) of ICTA.
Section 364: Deductions where living accommodation provided
1584.This section applies where the benefit provided is living accommodation. A deduction may be allowed where the earnings include an amount treated as earnings under Chapter 5 of Part 3. If the employee would have been allowed a deduction under Chapter 2 or Chapter 5 of this Part if he had paid for the accommodation, a deduction is allowed under this section. It derives from section 145(3) and 146(9) of ICTA.
1585.A limit is placed on the deduction to be made. The deduction will be calculated on the basis that the amount paid by the employee for the accommodation is equal to the amount treated as earnings in respect of that accommodation.
1586.Subsection (1) sets out the conditions which must apply if a deduction from earnings is to be allowed.
1587.Subsection (2) quantifies the amount of the deduction.
Section 365: Deductions where employment-related benefit provided
1588.This section applies where an unspecified benefit is provided. A deduction may be due where the earnings include an amount treated as earnings under Chapter 10 of Part 3 of this Act in respect of a benefit. If the employee would have been allowed a deduction under Chapter 2 or Chapter 5 of this Part if he had paid for the cost of the benefit, a deduction is allowed under this section. It derives from section 156(8) of ICTA.
1589.Subsection (1) sets out the conditions which must apply if a deduction from earnings is to be allowed.
1590.Subsection (2) quantifies the amount of the deduction with the same limit as described for section 362.
1591.Subsection (3) contains an explanation of the “cost of the benefit”.
