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C. Payment of a premium under a qualifying insurance contract, but only to the | |
extent that the premium relates to— | |
(a) provision in the contract for the employee to be indemnified | |
against a payment falling within paragraph A, or | |
(b) provision in the contract for the payment of any costs or | 5 |
expenses falling within paragraph B. | |
(2) But a deduction is not allowed for a payment which falls within paragraph A | |
or B if it would be unlawful for the employer to enter into a contract of | |
insurance in respect of the liability, or costs or expenses, in question. | |
(3) In this Chapter— | 10 |
(a) “premium”, in relation to a qualifying insurance contract, means an | |
amount payable to the insurer under the contract, and | |
(b) where a qualifying insurance contract relates to more than one person, | |
employment or risk, the part of the premium to be treated as relating to | |
each of them is to be determined by apportionment on a just and | 15 |
reasonable basis. | |
347 Payments made after leaving the employment | |
(1) A deduction for a payment is not allowed under section 346 if— | |
(a) the employee has ceased to hold the employment, and | |
(b) the payment is made after the day on which the employee ceased to | 20 |
hold the employment. | |
(2) If subsection (1) applies, see section 555 (former employee entitled to | |
deduction from total income). | |
348 Liabilities related to the employment | |
For the purposes of this Chapter each of the following kinds of liability is | 25 |
related to the employment— | |
| |
A. Liability imposed upon the employee because he did an act, or failed to do | |
an act— | |
(a) in his capacity as holder of the employment, or | 30 |
(b) in any other capacity in which he acted in the performance of | |
the duties of the employment. | |
| |
B. Liability imposed upon the employee in connection with any proceedings | |
relating to, or arising from, a claim that he is subject to a liability because he did | 35 |
an act, or failed to do an act— | |
(a) in his capacity as holder of the employment, or | |
(b) in any other capacity in which he acted in the performance of | |
the duties of the employment. | |
349 Meaning of “qualifying insurance contract” | 40 |
(1) In section 346 “qualifying insurance contract” means a contract of insurance | |
which meets conditions A, B, C and D. | |
(2) Condition A is that, so far as the risks insured against are concerned, the | |
contract only relates to one or more of the following— | |
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(a) the indemnification of an employee against a liability related to the | |
employment, | |
(b) the indemnification of a person against vicarious liability in respect of | |
a liability related to another person’s employment, | |
(c) the payment of costs or expenses incurred— | 5 |
(i) in connection with a claim that a person is subject to a liability | |
to which the insurance relates, or | |
(ii) in connection with any proceedings relating to or arising out of | |
a claim that a person is subject to a liability to which the | |
insurance relates, | 10 |
(d) the indemnification of an employer against loss from a payment made | |
by the employer to an employee in respect of— | |
(i) a liability related to the employment, or | |
(ii) any costs or expenses incurred as mentioned in paragraph (c). | |
(3) Condition B is that— | 15 |
(a) the period of insurance under the contract does not exceed 2 years or, if | |
it does, it does so only because of one or more renewals, each for a | |
period of 2 years or less, and | |
(b) the insured is not required to renew the contract for any period. | |
(4) Condition C is— | 20 |
(a) that the insured is not entitled under the contract to receive any | |
payment or other benefit in addition to— | |
(i) cover for the risks insured against, and | |
(ii) any right to renew the contract, or | |
(b) if the insured is so entitled, that the part of the premium reasonably | 25 |
attributable to the entitlement is not a significant part of the whole | |
premium. | |
(5) Condition D is that the contract is not connected with another contract. | |
350 Connected contracts | |
(1) An insurance contract is connected with another contract for the purposes of | 30 |
section 349 if conditions E and F are met— | |
(a) at the time when both contracts are first in force, or | |
(b) at any time after that time. | |
(2) Condition E is that one of the contracts was entered into— | |
(a) by reference to the other, or | 35 |
(b) with a view to enabling or facilitating entry into the other on particular | |
terms. | |
(3) Condition F is that the terms on which one of the contracts was entered into are | |
significantly different from what they would have been if— | |
(a) it had not been entered into in anticipation of the other being entered | 40 |
into, or | |
(b) the other had not also been entered into. | |
(4) If— | |
(a) there is only one such significant difference in terms, and | |
(b) the contracts meet conditions A, B and C specified in section 349, | 45 |
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the difference may be disregarded in the following cases. | |
(5) The first case is where the difference is a reduction in premiums under the | |
contract that is reasonably attributable only to the contract— | |
(a) containing a right to renew, or | |
(b) being entered into by way of renewal. | 5 |
(6) The second case is where— | |
(a) two or more contracts have been entered into as part of a single | |
transaction, and | |
(b) the difference is reductions in their premiums that are reasonably | |
attributable only to the premium under each of them having been fixed | 10 |
by reference to the appropriate proportion of the combined premium. | |
(7) In subsection (6) “the combined premium” means the amount that would have | |
been the total premium under a single contract relating to all the risks covered | |
by the contracts. | |
Expenses of ministers of religion | 15 |
351 Expenses of ministers of religion | |
(1) A deduction is allowed from any earnings from any employment as a minister | |
of a religious denomination for amounts incurred by the minister wholly, | |
exclusively and necessarily in the performance of duties of such an | |
employment. | 20 |
(2) If a minister of a religious denomination pays rent in respect of a dwelling- | |
house, part of which is used mainly and substantially for the purposes of such | |
duties, a deduction is allowed from the minister’s earnings from any | |
employment as such a minister for— | |
(a) one quarter of the rent, or | 25 |
(b) if less, the part of the rent that, on a just and reasonable apportionment, | |
is attributable to that part of the dwelling-house. | |
(3) If— | |
(a) an interest in premises belongs to a charity or an ecclesiastical | |
corporation, and | 30 |
(b) because of that interest and by reason of holding an employment as a | |
minister of a religious denomination, the minister has a residence in the | |
premises from which to perform the duties of the employment, | |
a deduction is allowed from the minister’s earnings from any such | |
employment for part of any expenses borne by the minister on the | 35 |
maintenance, repair, insurance or management of the premises. | |
(4) The amount of the deduction is—![equation: plus[over[char[A],num[4.00000000,"4"]],minus[char[B]]]](missing.gif) | |
where— | |
A is the amount of the expenses borne by the minister on the maintenance, | |
repair, insurance or management of the premises, and | 40 |
B is the amount of those expenses that are allowed under subsection (1). | |
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(5) In this section “charity” means a body of persons or trust established for | |
charitable purposes only. | |
(6) Subsection (1) needs to be read with section 359 (disallowance of travel | |
expenses: mileage allowances and reliefs). | |
Agency fees paid by entertainers | 5 |
352 Limited deduction for agency fees paid by entertainers | |
(1) A deduction is allowed from earnings from an employment as an entertainer | |
for agency fees (and any value added tax on them) if the fees are calculated as | |
a percentage of the whole or part of the earnings from the employment. | |
This is subject to the limit in subsection (2). | 10 |
(2) Amounts may be deducted under this section in calculating the net taxable | |
earnings from an employment in a tax year only to the extent that, in aggregate, | |
they do not exceed 17.5% of the taxable earnings from the employment in the | |
tax year. | |
(3) Subsections (4) and (5) apply for the purposes of this section. | 15 |
(4) “Entertainer” means an actor, dancer, musician, singer or theatrical artist. | |
(5) “Agency fees”, in relation to an employment, means— | |
(a) fees paid under a contract between the employee and another person, | |
to whom the fees are paid, who— | |
(i) agrees under the contract to act as an agent of the employee in | 20 |
connection with the employment, and | |
(ii) at the time the fees are paid is carrying on an employment | |
agency with a view to profit, and | |
(b) fees paid under an arrangement under which a co-operative society or | |
the members of such a society agree to act as the employee’s agent in | 25 |
connection with the employment. | |
(6) For the purposes of subsection (5)— | |
“co-operative society” does not include a society which carries on or | |
intends to carry on business with the object of making profits mainly | |
for the payment of interest, dividends or bonuses on money invested or | 30 |
deposited with or lent to the society or any other person, and | |
“employment agency” has the meaning given by section 13(2) of the | |
Employment Agencies Act 1973 (c. 35). | |
Special rules for earnings with a foreign element | |
353 Deductions from earnings charged on remittance | 35 |
(1) A deduction is allowed from earnings charged on remittance for expenses | |
within subsection (2) if the condition in subsection (3) is met. | |
(2) The expenses are— | |
(a) any expenses— | |
(i) paid by the employee out of the earnings, or | 40 |
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(ii) paid on the employee’s behalf by another person and included | |
in the earnings, and | |
(b) any other expenses paid in the United Kingdom in the tax year or an | |
earlier tax year in which the employee has been resident in the United | |
Kingdom. | 5 |
(3) The condition is that the expenses would have been deductible under sections | |
336 to 342 if the earnings had been earnings charged on receipt in the tax year | |
in which the expenses were incurred. | |
(4) Where— | |
(a) any of the deductibility provisions refers to amounts or expenses that | 10 |
would be deductible from earnings if they were paid by a person, and | |
(b) the earnings in question are earnings charged on remittance, | |
it is assumed for the purposes of those provisions that the person pays the | |
amounts or expenses out of those earnings. | |
354 Disallowance of expenses relating to earnings taxed on different basis or | 15 |
untaxed | |
(1) If the earnings from an employment for a tax year include both earnings | |
charged on receipt and other earnings, no deduction is allowed under sections | |
336 to 342 from the earnings charged on receipt for an amount paid in respect | |
of duties of the employment to which the other earnings relate. | 20 |
(2) If the earnings from an employment for a tax year include both earnings | |
charged on remittance and other earnings, no deduction is allowed under | |
section 353 from the earnings charged on remittance for an amount paid in | |
respect of duties of the employment to which the other earnings relate. | |
(3) This section is to be disregarded for the purposes of the deductibility | 25 |
provisions. | |
355 Deductions for corresponding payments by non-domiciled employees with | |
foreign employers | |
(1) An employee may make a claim to the Board of Inland Revenue under this | |
section if conditions A to D are met. | 30 |
(2) Condition A is that the employee is not domiciled in the United Kingdom. | |
(3) Condition B is that the employment is with a foreign employer. | |
(4) Condition C is that the employee has made a payment out of earnings from the | |
employment. | |
(5) Condition D is that the payment does not reduce the employee’s liability to | 35 |
United Kingdom income tax, but was made in circumstances corresponding to | |
those in which it would do so. | |
(6) If the Board are satisfied that conditions A to D are met, they may allow the | |
payment as a deduction under this Chapter. | |
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