EIM20503 - The benefits code: "by reason of the employment": expenses paid and benefits provided by someone other than the employer: third party benefits
Sections 62, 70(1)(b) and 201(2) ITEPA 2003, Part 7A ITEPA 2003
Expenses payments and benefits made or provided by someone other than the employee바카라 사이트檚 employer are often called 바카라 사이트渢hird party benefits바카라 사이트�.
Such payments and benefits are within the rules in the benefits code (EIM20006) where they are made or provided 바카라 사이트渂y reason of the employment바카라 사이트� (EIM20501) under the normal meaning of those words. But they are not chargeable under those rules if they are otherwise chargeable as earnings, for example, under Section 62 ITEPA 2003. Examples of benefits which are chargeable as earnings are at EIM00530 onwards. Nor are they chargeable under those rules if they are chargeable under Part 7A ITEPA 2003 (Employment income provided through third parties - see EIM45000 onwards and EIM45705).
However, note that in order to come within the scope of Part 7A there must be a 바카라 사이트渞elevant step바카라 사이트� and the provision of a benefit will not necessarily fall within any of the defined types of 바카라 사이트渞elevant step. See EIM45055.
In addition, note that as long as there is no tax avoidance involved, relevant steps taken by members of the same group of the companies as the employer are generally excluded from the application of Part 7A - see EIM45035
Interaction of 바카라 사이트渂y reason of the employment바카라 사이트� with Section 62 ITEPA 2003
It is important to understand the distinction between Section 62 on the one hand, and Sections 70(1) and 201(2) on the other hand. Section 62(1) applies to earnings 바카라 사이트渋n relation to an employment바카라 사이트�, including anything that is an 바카라 사이트渆molument of the employment바카라 사이트� (Section 62(2)(c)). Section 70(1) and Section 201(3) apply to expense payments and benefits provided 바카라 사이트渂y reason of the employment바카라 사이트�. Section 62 is based on what was previously Section 19 ICTA 1988, which charged to tax emoluments 바카라 사이트渇rom an employment바카라 사이트�. Case law shows that the phrase 바카라 사이트渂y reason of the employment바카라 사이트� has a wider meaning than 바카라 사이트渇rom the employment바카라 사이트� (EIM00600). The words 바카라 사이트渇rom the employment바카라 사이트� are not reproduced in Section 62 but earnings chargeable under that section include emoluments 바카라 사이트渙f the employment바카라 사이트� and in this context 바카라 사이트渙f the employment바카라 사이트� has the same meaning as 바카라 사이트渇rom the employment바카라 사이트�.
Case law guidance: by reason of the employment
In Wicks v Firth (56TC338) Lord Denning said that 바카라 사이트渂y reason of the employment바카라 사이트� covered cases where an employee would not have received a benefit unless he had been an employee. The employment must be one of the causes of the benefit being provided. It need not be the sole cause or even the main one. But it must be an operative cause in the sense that it was a condition of the benefit being granted.
In the same case Lord Oliver said that the question to ask is 바카라 사이트渨hat is it that enables the person concerned to enjoy the benefit?바카라 사이트� If the answer to that question properly includes 바카라 사이트渢he employment바카라 사이트� as one of the factors then that is 바카라 사이트渂y reason of바카라 사이트� the employment.
In Mairs v Haughey (66 TC 273) Lord Chief Justice Hutton preferred Lord Oliver바카라 사이트檚 way of expressing the test. In particular where the employment was only an incidental factor in past history, and not a current reason for the benefit being provided, his view was that did not amount to 바카라 사이트渂y reason of employment바카라 사이트�.
These judicial comments were given as general observation and whilst they carry weight they are not a legally binding restriction on the meaning of the words 바카라 사이트渂y reason of바카라 사이트�. In practice you can normally assume that a benefit which is provided by someone other than the employer and which is plainly connected with the employee바카라 사이트檚 employment has been provided by reason of the employment.
However some third party benefits, small gifts and entertaining, are exempt from tax.