Part 3

Employment income: earnings and benefits etc. treated as earnings
Chapter 2

Taxable benefits: the benefits code

The benefits code

The benefits code
63
1
In the employment income Parts “the benefits code” means—
- this Chapter,
- Chapter 3 (expenses payments),
- Chapter 4 (vouchers and credit-tokens),
- Chapter 5 (living accommodation),
- Chapter 6 (cars, vans and related benefits),
- Chapter 7 (loans), and
......
- Chapter 10 (residual liability to charge)
...
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
The benefits code has effect subject to section 554Z2(2).

Relationship between earnings and benefits code
64
1
This section applies if, apart from this section, the same benefit would give rise to two amounts (“A” and “B”)—
a
A being an amount of earnings as defined in Chapter 1 of this Part, and
b
B being an amount to be treated as earnings under the benefits code.
2
In such a case—
a
A constitutes earnings as defined in Chapter 1 of this Part, and
b
the amount (if any) by which B exceeds A is to be treated as earnings under the benefits code.
3
This section does not apply in connection with living accommodation to which Chapter 5 of this Part applies.
4
In that case section 109 applies to determine the relationship between that Chapter and Chapter 1 of this Part.
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dispensations relating to benefits within provisions not applicable to lower-paid employment
65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General definitions for benefits code

Meaning of “employment” and related expressions
66
1
In the benefits code—
a
“employment” means a taxable employment under Part 2, and
b
“employed”, “employee” and “employer” have corresponding meanings.
2
Where a Chapter of the benefits code applies in relation to an employee—
a
references in that Chapter to “the employment” are to the employment of that employee, and
b
references in that Chapter to “the employer” are to the employer in respect of that employment.
3
For the purposes of the benefits code an employment is a “taxable employment under Part 2” in a tax year if the earnings from the employment for that year are (or would be if there were any) general earnings to which the charging provisions of Chapter 4 or 5 of Part 2 apply.
4
In subsection (3)—
a
the reference to an employment includes employment as a director of a company, and
b
“earnings” means earnings as defined in Chapter 1 of this Part.
5
In the benefits code “
lower-paid employment as a minister of religion
” has the same meaning as in Part 4 (see section 290D).

Meaning of “director” and “full-time working director”
67
1
In the benefits code “director” means—
a
in relation to a company whose affairs are managed by a board of directors or similar body, a member of that body,
b
in relation to a company whose affairs are managed by a single director or similar person, that director or person, and
c
in relation to a company whose affairs are managed by the members themselves, a member of the company,
and includes any person in accordance with whose directions or instructions the directors of the company (as defined above) are accustomed to act.
2
For the purposes of subsection (1) a person is not to be regarded as a person in accordance with whose directions or instructions the directors of the company are accustomed to act merely because the directors act on advice given by that person in a professional capacity.
3
In the benefits code “full-time working director” means a director who is required to devote substantially the whole of his time to the service of the company in a managerial or technical capacity.

Meaning of “material interest” in a company
68
1
For the purposes of the benefits code a person has a material interest in a company if condition A or B is met.
2
Condition A is that the person (with or without one or more associates) or any associate of that person (with or without one or more other such associates) is—
a
the beneficial owner of, or
b
able to control, directly or through the medium of other companies or by any other indirect means,
more than 5% of the ordinary share capital of the company.
3
Condition B is that, in the case of a close company, the person (with or without one or more associates) or any associate of that person (with or without one or more other such associates), possesses or is entitled to acquire, such rights as would—
a
in the event of the winding-up of the company, or
b
in any other circumstances,
give an entitlement to receive more than 5% of the assets which would then be available for distribution among the participators.
4
In this section—
- “associate” has the meaning given by section 448 of CTA 2010 except that, for this purpose, “relative” in section 448(1) has the meaning given by subsection (5) below, and
- “participator” has the meaning given by section 454 of CTA 2010.
5
For the purposes of this section a person (“A”) is a relative of another (“B”) if A is—
a
B’s spouse or civil partner,
b
a parent, child or remoter relation in the direct line either of B or of B’s spouse or civil partner,
c
a brother or sister of B or of B’s spouse or civil partner, or
d
the spouse or civil partner of a person falling within paragraph (b) or (c).

Extended meaning of “control”
69
1
The definition of “control” in section 995 of ITA 2007 (which is applied for the purposes of this Act by section 719) is extended as follows.
2
For the purposes of the benefits code that definition applies (with the necessary modifications) in relation to an unincorporated association as it applies in relation to a body corporate.

Optional remuneration arrangements
69A
1
Subsections (2) to (7) have effect for the purposes of the benefits code.
2
A benefit provided for an employee is provided under “optional remuneration arrangements” so far as it is provided under arrangements of type A or B (regardless of whether those arrangements are made before or after the beginning of the person's employment).
3
“Type A arrangements” are arrangements under which, in return for the benefit, the employee gives up the right (or a future right) to receive an amount of earnings within Chapter 1 of Part 3.
4
“Type B arrangements” are arrangements (other than type A arrangements) under which the employee agrees to be provided with the benefit rather than an amount of earnings within Chapter 1 of Part 3.
5
A benefit provided for an employee is to be regarded as provided under optional remuneration arrangements (whether of type A or type B) so far as it is just and reasonable to attribute the provision of the benefit to the arrangements in question.
6
Where a benefit is provided for an employee under any arrangements, the mere fact that under the arrangements the employee makes good, or is required to make good, any part of the cost of provision is not to be taken to show that the benefit is (to any extent) provided otherwise than under optional remuneration arrangements.
7
Where a benefit is provided for an employee partly under optional remuneration arrangements and partly otherwise than under such arrangements, the benefits code is to apply with any modifications (including provision for just and reasonable apportionments) that may be required for ensuring that the benefit is treated—
a
in accordance with the relevant provision in the column 2 of the table so far as it is provided under optional remuneration arrangements, and
b
in accordance with the relevant provision in column 1 of the table so far as it is provided otherwise than under such arrangements.
Column 1 | Column 2
Section | Section
81(1) | 81(1A)(b)
87(1) | 87A(1)(a)
94(1) | 94A(1)(a)
102(1A) | 102(1B)(b)
120(1) | 120A(1)(a)
149(1) | 149A(2)(a)
154(1) | 154A(1)(a)
160(1) | 160A(2)(a)
175(1) | 175(1A)(b)
203(1) | 203A(1)(a)

Optional remuneration arrangements: supplementary
69B
1
For the purposes of the benefits code “the amount foregone”—
a
in relation to a benefit provided for an employee under type A arrangements means the amount of earnings mentioned in section 69A(3);
b
in relation to a benefit provided for an employee under type B arrangements means the amount of earnings mentioned in section 69A(4);
c
in relation to a benefit provided for an employee partly under type A arrangements and partly under type B arrangements, means the sum of the amounts foregone under the arrangements of each type.
2
Subsection (3) applies where, in order to determine the amount foregone with respect to a particular benefit mentioned in section 69A(3) or (4), it is necessary to apportion an amount of earnings to the benefit.
3
The apportionment is to be made on a just and reasonable basis.
4
In this section and section 69A references to a benefit provided for an employee include a benefit provided for a member of an employee's family or household.
5
In this section and section 69A—
- “
benefit
” includes any benefit or facility, regardless of its form and the manner of providing it;
- “
earnings
” means earnings within Chapter 1 of Part 3 (and includes a reference to amounts which would have been such earnings if the employee had received them).
S. 66(5) inserted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 6
S. 63(1) entries repealed (with effect in accordance with Sch. 22 para. 20(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 20(1), Sch. 43 Pt. 3(4)
Words in s. 68(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 383(4)(a)(ii) (with Sch. 2)
Words in s. 63(1) omitted (with effect in accordance with s. 13(4) of the amending Act) by virtue of Finance Act 2015 (c. 11), Sch. 1 para. 5(2)(b)
Word in s. 63(1) inserted (with effect in accordance with s. 13(4) of the amending Act) by Finance Act 2015 (c. 11), Sch. 1 para. 5(2)(a)
Words in s. 68(3) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 383(3) (with Sch. 2)
Words in s. 68(5) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 140
Words in s. 69(1) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 430 (with Sch. 2)
Words in s. 68(2) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 383(2) (with Sch. 2)
S. 64(5)(6) repealed (with effect in accordance with Sch. 22 para. 21(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 21(1), Sch. 43 Pt. 3(4)
S. 65 omitted (with effect in accordance with s. 12(5) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 12(2) (with s. 12(6)(7))
S. 63(2)-(4) omitted (with effect in accordance with s. 13(4) of the amending Act) by virtue of Finance Act 2015 (c. 11), Sch. 1 para. 5(3)
Words in s. 68(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 383(4)(b) (with Sch. 2)
Words in s. 68(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 383(4)(a)(i) (with Sch. 2)
S. 63(5) inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 8
Ss. 69A, 69B inserted (with effect in accordance with Sch. 2 para. 62 of the amending Act) by Finance Act 2017 (c. 10), Sch. 2 para. 1