(1)After section 157 of the Taxes Act 1988 there shall be inserted—
Where, in any year in the case of a person employed in employment to which this Chapter applies—
(a)a car is made available as mentioned in section 157, and
(b)an alternative to the benefit of the car is offered,
the mere fact that the alternative is offered shall not make the benefit chargeable to tax under section 19(1).”
(2)In section 158 of the Taxes Act 1988 (car fuel) in subsection (1) for the words “which is made available as mentioned in section 157,” there shall be substituted “ the benefit of which is chargeable to tax under section 157 as his income, ”.
(3)In section 167 of the Taxes Act 1988 (employments to which Chapter II of Part V of that Act applies) at the beginning of subsection (2) (calculation of emoluments) there shall be inserted“Subject to subsection (2B) below” and after that subsection there shall be inserted—
“(2B)Where, in any relevant year—
(a)a car is made available as mentioned in section 157, and
(b)an alternative to the benefit of the car is offered,
subsection (2)(a) above shall have effect as if, in connection with the benefit of the car, the amount produced under subsection (2C) below together with any amounts falling within (2D) below were the amounts to be included in the emoluments.
(2C)The amount produced under this subsection is the higher of—
(a)the amount equal to the aggregate of—
(i)whatever is the cash equivalent (ascertained in accordance with Schedule 6) of the benefit of the car; and
(ii)whatever is the cash equivalent (ascertained in accordance with section 158) of the benefit of any fuel provided, by reason of the employee’s employment, for the car; and
(b)the amount which would be chargeable to tax under section 19(1), if the benefit of the car were chargeable under that section by reference to the alternative offered to that benefit.
(2D)The amounts which fall within this subsection are those which would come into charge under section 141, 142 or 153 if the section in question applied in connection with the car.”
(4)This section shall have effect for the year 1995-96 and subsequent years of assessment.