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Disallowance of business entertainment and gifts expenses | |
356 Disallowance of business entertainment and gifts expenses | |
(1) No deduction from earnings is allowed under this Part for expenses incurred | |
in providing entertainment or a gift in connection with the employer’s trade, | |
business, profession or vocation. | 5 |
(2) Subsection (1) is subject to the exceptions in— | |
(a) section 357 (exception where employer’s expenses disallowed), and | |
(b) section 358 (other exceptions). | |
(3) For the purposes of this section and those sections— | |
(a) “entertainment” includes hospitality of any kind, and | 10 |
(b) expenses incurred in providing entertainment or a gift include | |
expenses incurred in providing anything incidental to the provision of | |
entertainment or a gift. | |
357 Business entertainment and gifts: exception where employer’s expenses | |
disallowed | 15 |
(1) The prohibition in section 356 on deducting expenses does not apply if— | |
(a) the earnings include an amount in respect of the expenses, | |
(b) the employer— | |
(i) paid the amount to, or on behalf of, the employee, or | |
(ii) put it at the employee’s disposal, | 20 |
exclusively for meeting expenses incurred or to be incurred by the | |
employee in providing the entertainment or gift, and | |
(c) condition A, B or C is met. | |
(2) Condition A is that the deduction of the amount falls to be disallowed under | |
section 577 of ICTA in calculating the employer’s profits from the trade, | 25 |
profession or vocation in question for the purposes of the Tax Acts (or it would | |
do so apart from the exemption in section 505(1)(e) of ICTA or any relief | |
applying in respect of those profits). | |
(3) Condition B is that the inclusion of the amount falls to be disallowed under that | |
section in calculating the employer’s expenses of management for the | 30 |
purposes of giving relief under the Tax Acts (or it would do so apart from | |
another relief applying to the employer). | |
(4) Condition C is that— | |
(a) the employer is a tonnage tax company during the whole or part of the | |
tax year, and | 35 |
(b) apart from the tonnage tax election, the deduction of the amount | |
included in the employee’s earnings would fall to be disallowed in | |
calculating the employer’s relevant shipping profits. | |
(5) In subsection (4) “tonnage tax company”, “tonnage tax election” and “relevant | |
shipping profits” have the same meaning as in Schedule 22 to FA 2000. | 40 |
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358 Business entertainment and gifts: other exceptions | |
(1) The prohibition in section 356 on deducting expenses does not apply if the | |
expenses are incurred in providing entertainment or gifts for the employer’s | |
employees unless— | |
(a) they are also provided for others, and | 5 |
(b) their provision for the employees is incidental to their provision for the | |
others. | |
(2) For this purpose directors and persons engaged in the management of a | |
company are regarded as employed by it. | |
(3) The prohibition in section 356 on deducting expenses does not apply if the | 10 |
expenses are incurred in providing a gift which incorporates a conspicuous | |
advertisement for the employer or, if the employer is a company, another | |
company which belongs to the same group as the employer, unless— | |
(a) the gift is food, drink, tobacco or a token or voucher exchangeable for | |
goods, or | 15 |
(b) the cost of the gift to the donor, together with any other gifts (except | |
food, drink, tobacco or tokens or vouchers exchangeable for goods) | |
given to the same person in the same tax year, is more than £50. | |
(4) In subsection (3) “group” means a body corporate and its 51% subsidiaries. | |
Other rules preventing deductions of particular kinds | 20 |
359 Disallowance of travel expenses: mileage allowances and reliefs | |
(1) No deduction may be made under the travel deductions provisions in respect | |
of travel expenses incurred in connection with the use by the employee of a | |
vehicle that is not a company vehicle if condition A or B is met. | |
(2) Condition A is that mileage allowance payments are made to the employee in | 25 |
respect of the use of the vehicle. | |
(3) Condition B is that mileage allowance relief is available in respect of the use of | |
the vehicle by the employee (see section 231). | |
(4) In this section— | |
“company vehicle” has the meaning given by section 236(2), | 30 |
“mileage allowance payments” has the meaning given by section 229(2), | |
and | |
“the travel deductions provisions” means sections 337 to 342, 370, 371, 373 | |
and 374 (travel expenses) and section 351 (expenses of ministers of | |
religion). | 35 |
360 Disallowance of certain accommodation expenses of MPs and other | |
representatives | |
(1) No deduction from earnings is allowed under this Chapter or section 373 (non- | |
domiciled employee’s travel costs and expenses where duties performed in | |
UK) for accommodation expenses incurred by a member of— | 40 |
(a) the House of Commons, | |
(b) the Scottish Parliament, | |
(c) the National Assembly for Wales, or | |
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(d) the Northern Ireland Assembly. | |
(2) In this section “accommodation expenses” means expenses incurred in, or in | |
connection with, the provision or use of residential or overnight | |
accommodation to enable the member to perform duties as a member of the | |
Parliament or Assembly in or about— | 5 |
(a) the place where it sits, or | |
(b) the constituency or region which the member represents. | |
Chapter 3 | |
Deductions from benefits code earnings | |
Introduction | 10 |
361 Scope of this Chapter: cost of benefits deductible as if paid by employee | |
A deduction from a person’s earnings is allowed under the following | |
provisions of this Chapter where— | |
(a) the earnings include an amount treated as earnings under— | |
(i) Chapter 4 of Part 3 (taxable benefits: vouchers and credit- | 15 |
tokens), | |
(ii) Chapter 5 of Part 3 (taxable benefits: living accommodation), or | |
(iii) Chapter 10 of Part 3 (taxable benefits: residual liability to | |
charge), and | |
(b) an amount in respect of the benefit in question would be deductible | 20 |
under Chapter 2 or 5 of this Part if the person had incurred and paid it. | |
Deductions where amounts treated as earnings under the benefits code | |
362 Deductions where non-cash voucher provided | |
(1) A deduction from earnings is allowed if— | |
(a) the earnings include an amount treated as earnings under section 87(1) | 25 |
(cash equivalent of benefit of non-cash voucher treated as earnings), | |
(b) the voucher is exchanged for goods or services (whether in the tax year | |
or a later year), and | |
(c) had the employee incurred and paid the cost of the goods or services in | |
the tax year, the whole or part of the amount paid would have been | 30 |
deductible from the earnings under Chapter 2 or 5 of this Part. | |
(2) The deduction is equal to the lesser of— | |
(a) the amount treated as earnings, and | |
(b) the amount that would have been so deductible. | |
363 Deductions where credit-token provided | 35 |
(1) A deduction from earnings is allowed if— | |
(a) the earnings include an amount treated as earnings under section 94(1) | |
(cash equivalent of benefit of credit-token treated as earnings), and | |
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(b) had the employee incurred and paid the cost of the goods or services | |
obtained by using the token, the whole or part of the amount paid | |
would have been deductible from the earnings under Chapter 2 or 5 of | |
this Part. | |
(2) The deduction is equal to the lesser of— | 5 |
(a) the amount treated as earnings, and | |
(b) the amount that would have been so deductible. | |
364 Deductions where living accommodation provided | |
(1) A deduction from earnings is allowed if— | |
(a) the earnings include an amount treated as earnings under Chapter 5 of | 10 |
Part 3 (taxable benefits: living accommodation), and | |
(b) had the employee incurred and paid an amount equal to that amount for the | |
accommodation in the tax year, the whole or part of the amount paid would | |
have been deductible under Chapter 2 or 5 of this Part. | |
(2) The deduction is equal to the amount that would have been so deductible. | 15 |
365 Deductions where employment-related benefit provided | |
(1) A deduction from earnings is allowed if— | |
(a) the earnings include an amount treated as earnings under Chapter 10 | |
of Part 3 (taxable benefits: residual liability to charge) in respect of a | |
benefit, and | 20 |
(b) had the employee incurred and paid the cost of the benefit, the whole | |
or part of the amount paid would have been deductible under Chapter | |
2 or 5 of this Part. | |
(2) The deduction is equal to the amount that would have been so deductible. | |
(3) For the purposes of this section, the cost of the benefit is determined in | 25 |
accordance with sections 204 to 206. | |
Chapter 4 | |
Fixed allowances for employee’s expenses | |
Introduction | |
366 Scope of this Chapter: amounts fixed by Treasury | 30 |
A deduction from an employee’s earnings for an amount is allowed under this | |
Chapter where the amount has been fixed by the Treasury by reference to the | |
employee’s employment. | |
Fixed sum deductions | |
367 Fixed sum deductions for repairing and maintaining work equipment | 35 |
(1) A deduction is allowed for the sum, if any, fixed by the Treasury as in their | |
opinion representing the average annual expenses incurred by employees of | |
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(1) the class to which the employee belongs in respect of the repair and | |
maintenance of work equipment. | |
(2) The Treasury may only fix such a sum for a class of employees if they are | |
satisfied that— | |
(a) the employees are generally responsible for the whole or part of the | 5 |
expense of repairing and maintaining the work equipment, and | |
(b) the expenses for which they are generally responsible would be | |
deductible from the employees’ earnings under section 336 if paid by | |
them. | |
(3) No deduction is allowed under this section if the employer pays or reimburses | 10 |
the expenses in respect of which the sum is fixed or would do so if requested. | |
(4) If the employer pays or reimburses part of those expenses or would do so if | |
requested, the amount of the deduction is reduced by the amount which is or | |
would be paid or reimbursed. | |
(5) In this section “work equipment” means tools or special clothing. | 15 |
(6) This section needs to be read with section 330(2) (prevention of double | |
deductions). | |
368 Fixed sum deductions from earnings payable out of public revenue | |
(1) A deduction is allowed from earnings payable out of the public revenue for the | |
employee’s fixed sum expenses in respect of the duties to which the earnings | 20 |
relate. | |
(2) “Fixed sum expenses” means the sum, if any, fixed by the Treasury as in their | |
opinion representing the average annual expenses which employees of the | |
employee’s description are obliged to pay wholly, exclusively and necessarily | |
in the performance of duties to which such earnings relate. | 25 |
(3) This section needs to be read with section 330(2) (prevention of double | |
deductions). | |
Chapter 5 | |
Deductions for earnings representing benefits or reimbursed expenses | |
Introduction | 30 |
369 Scope of this Chapter: earnings representing benefits or reimbursed expenses | |
(1) A deduction from a person’s earnings for an amount is allowed under the | |
following provisions of this Chapter where the amount is included in the | |
earnings in respect of— | |
(a) provision made for the person, or | 35 |
(b) expenses reimbursed by another person. | |
(2) In this Chapter references to “the included amount” are references to the | |
amount so included. | |
(3) If the included amount is an amount treated as earnings under— | |
(a) Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens), | 40 |
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(b) Chapter 5 of Part 3 (taxable benefits: living accommodation), or | |
(c) Chapter 10 of Part 3 (taxable benefits: residual liability to charge), | |
a deduction may be allowed instead in respect of the benefit in question under | |
Chapter 3 of this Part (deductions from benefits code earnings). | |
Travel costs and expenses where duties performed abroad | 5 |
370 Travel costs and expenses where duties performed abroad: employee’s travel | |
(1) A deduction is allowed from earnings which are taxable earnings under | |
section 15 or 21 (earnings for year when employee resident and ordinarily | |
resident in UK) if— | |
(a) the earnings include an amount in respect of— | 10 |
(i) the provision of travel facilities for a journey made by the | |
employee, or | |
(ii) the reimbursement of expenses incurred by the employee on | |
such a journey, and | |
(b) the circumstances fall within Case A, B or C. | 15 |
(2) The deduction is equal to the included amount. | |
(3) Case A is where— | |
(a) the employee is absent from the United Kingdom wholly and | |
exclusively for the purpose of performing the duties of one or more | |
employments, | 20 |
(b) the duties concerned can only be performed outside the United | |
Kingdom, and | |
(c) the journey is— | |
(i) a journey from a place outside the United Kingdom where such | |
duties are performed to a place in the United Kingdom, or | 25 |
(ii) a return journey following such a journey. | |
(4) Case B is where— | |
(a) the duties of the employment are performed partly outside the United | |
Kingdom, | |
(b) those duties are not performed on a vessel, | 30 |
(c) the journey is between a place in the United Kingdom and a place | |
outside the United Kingdom where duties of the employment are | |
performed, | |
(d) the duties performed outside the United Kingdom can only be | |
performed there, and | 35 |
(e) the journey is made wholly and exclusively for the purpose of | |
performing them or returning after performing them. | |
(5) Case C is where— | |
(a) the duties of the employment are performed partly outside the United | |
Kingdom, | 40 |
(b) those duties are performed on a vessel, | |
(c) the journey is between a place in the United Kingdom and a place | |
outside the United Kingdom where duties of the employment are | |
performed, | |
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(d) the duties performed outside the United Kingdom can only be | |
performed there, and | |
(e) the journey is made wholly and exclusively for the purpose of | |
performing those duties, or those duties and other duties of the | |
employment, or returning after performing them. | 5 |
371 Travel costs and expenses where duties performed abroad: visiting spouse’s | |
or child’s travel | |
(1) A deduction is allowed from earnings which are taxable earnings under | |
section 15 or 21 (earnings for year when employee resident and ordinarily | |
resident in UK) if— | 10 |
(a) the earnings include an amount in respect of— | |
(i) the provision of travel facilities for a journey made by the | |
employee’s spouse or child, or | |
(ii) the reimbursement of expenses incurred by the employee on | |
such a journey, and | 15 |
(b) conditions A to C are met. | |
(2) The deduction is equal to the included amount. | |
(3) Condition A is that the employee is absent from the United Kingdom for a | |
continuous period of at least 60 days for the purpose of performing the duties | |
of one or more employments. | 20 |
(4) Condition B is that the journey is between a place in the United Kingdom and | |
a place outside the United Kingdom where such duties are performed. | |
(5) Condition C is that the employee’s spouse or child is— | |
(a) accompanying the employee at the beginning of the period of absence, | |
(b) visiting the employee during that period, or | 25 |
(c) returning to a place in the United Kingdom after so accompanying or | |
visiting the employee. | |
(6) A deduction is not allowed under this section for more than two outward and | |
two return journeys by the same person in a tax year. | |
(7) In this section “child” includes a stepchild and an illegitimate child, but not a | 30 |
person who is 18 or over at the beginning of the outward journey. | |
372 Where seafarers’ duties are performed | |
For the purposes of— | |
(a) section 370 (employee’s travel costs and expenses where duties | |
performed abroad), and | 35 |
(b) section 371 (visiting spouse’s or child’s travel costs and expenses where | |
duties performed abroad), | |
whether duties performed on a vessel are performed in or outside the United | |
Kingdom is determined without regard to section 40(2) (certain duties treated | |
as performed in UK). | 40 |
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