Statutory Instrument 1992 No. 630

The Value Added Tax (Treatment of Transactions) Order 1992

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1992 No. 630

VALUE ADDED TAX

The Value Added Tax (Treatment of Transactions) Order 1992

The Treasury, in exercise of the powers conferred on them by section 3(3) of the Value Added Tax Act 1983^[1] and of all other powers enabling them in that behalf, hereby make the following Order:

    1.    This Order may be cited as the Value Added Tax (Treatment of Transactions) Order 1992 and shall come into force on 1st April 1992.

    2.    Where an employer gives an employee a choice between—
 (a) a particular rate of wages, salary or emoluments, or
 (b) in the alternative a lower rate of wages, salary or emoluments and, in addition, the right to the private use of a motor car provided by the employer,
and the employee chooses the alternative described in paragraph (b) above, then the provision to the employee of the right to use the motor car privately shall be treated as neither a supply of goods nor a supply of services (if it otherwise would be) to the extent only that the consideration for the provision of the motor car for the employee's private use is the difference between the wages, salary or emoluments available to him under paragraphs (a) and (b) of this article.

Gregory Knight

Thomas Sackville

Two of the Lords Commissioners of Her Majesty's Treasury

10th March 1992

The effect of this Order is that value added tax will no longer be levied in respect of amounts of salary, wages or other emoluments forgone by employees in return for the right to the private use of a motor car provided by their employer.

This Order has no effect in relation to supplies for which the consideration is in a form other than a salary sacrifice.

[1] 1983 c. 55. back