Commentary on Sections Glossary Part 3: Employment income: earnings and benefits etc. treated as earnings Overview
253.Before 1948 there was no legislation specific to benefits. Benefits were only chargeable to tax if they fell within the definition of emoluments, that is if they were “perquisites and profits whatsoever”.
254.It was established by case law in Tennant v Smith (1892) 3 TC 158 that a non-cash benefit given by an employer to an employee because of the employment would only be a chargeable emolument if it was “money’s worth”.
255.Finance Act 1948 brought in the first charge based on the cost of provision of benefits. Over the years that followed many additional provisions were introduced dealing with specific benefits, plus a number of ESCs and statements of practice. Many of the benefits provisions apply only to those with annual earnings of £8,500 or more.
256.The benefits code, set out in Chapters 2 to 11 of this Part, provides a coherent structure for all those provisions. There is now only a minority of employees earning less than £8,500. Accordingly, it seems more logical to apply the rules to everyone and then to exclude the “lower-paid”.
	Chapter 2 provides the introduction to the benefits code
	Chapters 3 to 9 contain the provisions that identify a specific type of benefit and explain how to calculate the appropriate taxable amount.
	Chapter 10 is a “sweep-up” provision, bringing in anything not in Chapters 3 to 9.
	Chapter 11 identifies employees who count as “lower-paid” and explains which chapters do not apply to them.
257.The introduction of a coherent benefits code, applying to all except the “lower-paid” is new.
258.The sections of ICTA which treat amounts as emoluments and from which Chapters 3 – 10 and sections 222 and 223 of this Act derive make no mention of the year “for” which they are so treated other than in section 162(5) and section 162(6). Instead a variety of terms are used. In Chapter 2 of Part 5 of ICTA the term is “treated as an emolument and accordingly chargeable to income tax under Schedule E”. In those sections which are not in Chapter 2 of Part 5 the terms used are “treated as having received an emolument” – sections 141 and 142, “assessable to income tax under Schedule E” – section 144A and “treated for the purposes of Schedule E as being in receipt of an emolument” – sections 145 and 146.
259.All of these terms provide the route into the Cases of Schedule E, so that either the receipts or remittance basis applies to the emoluments. The structure of Chapter 3 of Part 2 of this Act requires identification of what are general earnings for a tax year so that the provisions of Chapter 4 or 5 of Part 2 can be used to find the tax year in which the earnings are received or remitted.
260.What is implicit in the relevant sections of ICTA has been made explicit in this Act by stating for which year the amounts are treated as earnings in the following provisions:-
	Section 72 (Sums in respect of expenses treated as earnings)
	Section 81 (Benefit of cash voucher treated as earnings)
	Section 87 (Benefit of non-cash voucher treated as earnings)
	Section 94 (Benefit of credit-token treated as earnings)
	Section 102 (Benefit of living accommodation treated as earnings)
	Section 120 (Benefit of car treated as earnings)
	Section 149 (Benefit of car fuel treated as earnings)
	Section 154 (Benefit of van treated as earnings)
	Section 175 (Benefit of taxable cheap loan treated as earnings)
	Section 188 (Release or writing off of loan treated as earnings)
	Section 193 (Application of section 175 to notional loan)
	Section 203 (Cash equivalent of benefit treated as earnings)
	Section 222 (Payments by employer on account of tax)
	Section 223 (Payments on account of director’s tax)
261.This change in approach is described more fully in Note 7 in Annex 2.