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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 5 — Employment income: deductions allowed from earnings
Chapter 5 — Deductions for earnings representing benefits or reimbursed expenses

    188

 

Travel costs and expenses of non-domiciled employees where duties performed in UK

 373   Non-domiciled employee’s travel costs and expenses where duties performed

in UK

     (1)    This section applies if a person (“the employee”) who is not domiciled in the

United Kingdom—

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           (a)           receives earnings from an employment for duties performed in the

United Kingdom, and

           (b)           an amount is included in the earnings in respect of—

                  (i)                 the provision of travel facilities for a journey made by the

employee, or

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                  (ii)                the reimbursement of expenses incurred by the employee on

such a journey.

     (2)    A deduction is allowed from earnings from the employment which are

earnings charged on receipt if the journey meets conditions A and B.

     (3)    Condition A is that the journey ends on, or during the period of 5 years

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beginning with, a date that is a qualifying arrival date in relation to the

employee (see section 375).

     (4)    Condition B is that the journey is made—

           (a)           from the country outside the United Kingdom in which the employee

normally lives to a place in the United Kingdom in order to perform

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duties of the employment, or

           (b)           to that country from a place in the United Kingdom in order to return

to that country after performing such duties.

     (5)    If the journey is wholly for a purpose specified in subsection (4), the deduction

is equal to the included amount.

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     (6)    If the journey is only partly for such a purpose, the deduction is equal to so

much of the included amount as is properly attributable to that purpose.

 374   Non-domiciled employee’s spouse’s or child’s travel costs and expenses

where duties performed in UK

     (1)    This section applies if a person (“the employee”) who is not domiciled in the

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United Kingdom—

           (a)           receives earnings from an employment for duties performed in the

United Kingdom, and

           (b)           an amount is included in the earnings in respect of—

                  (i)                 the provision of travel facilities for a journey made by the

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employee’s spouse or child, or

                  (ii)                the reimbursement of expenses incurred by the employee on

such a journey.

     (2)    A deduction is allowed from earnings from the employment which are

earnings charged on receipt if conditions A to C are met.

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     (3)    Condition A is that the journey—

           (a)           is made between the country outside the United Kingdom in which the

employee normally lives and a place in the United Kingdom, and

 

 

Income Tax (Earnings and Pensions) Bill
Part 5 — Employment income: deductions allowed from earnings
Chapter 5 — Deductions for earnings representing benefits or reimbursed expenses

    189

 

           (b)           ends on, or during the period of 5 years beginning with, a date that is

a qualifying arrival date in relation to the employee (see section 375).

     (4)    Condition B is that the employee is in the United Kingdom for a continuous

period of at least 60 days for the purpose of performing the duties of one or

more employments from which the employee receives earnings for duties

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performed in the United Kingdom.

     (5)    Condition C is that the employee’s spouse or child is—

           (a)           accompanying the employee at the beginning of that period,

           (b)           visiting the employee during that period, or

           (c)           returning to the country outside the United Kingdom in which the

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employee normally lives, after so accompanying or visiting the

employee.

     (6)    If the journey is wholly for the purpose of so accompanying or visiting the

employee or so returning, the deduction is equal to the included amount.

     (7)    If the journey is only partly for that purpose, the deduction is equal to so much

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of the included amount as is properly attributable to that purpose.

     (8)    A deduction is not allowed under this section for more than two inward

journeys and two return journeys by the same person in a tax year.

     (9)    In this section “child” includes a stepchild and an illegitimate child, but not a

person who is 18 or over at the beginning of the inward journey.

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 375   Meaning of “qualifying arrival date”

     (1)    For the purposes of sections 373(3) and 374(3), a date is a qualifying arrival date

in relation to a person if—

           (a)           it is a date on which the person arrives in the United Kingdom to

perform duties of an employment from which the person receives

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earnings for duties performed in the United Kingdom, and

           (b)           condition A or B is met.

     (2)    Condition A is that the person has not been in the United Kingdom for any

purpose during the period of 2 years ending with the day before the date.

     (3)    Condition B is that the person was not resident in the United Kingdom in either

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of the 2 tax years preceding the tax year in which the date falls.

     (4)    If, in a case where condition B applies, there are 2 or more dates in the tax year

on which the person arrives in the United Kingdom to perform duties of an

employment from which the person receives earnings for duties performed in

the United Kingdom, the qualifying arrival date is the earliest of them.

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Foreign accommodation and subsistence costs and expenses

 376   Foreign accommodation and subsistence costs and expenses (overseas

employments)

     (1)    A deduction from earnings from an employment is allowed if—

           (a)           the duties of the employment are performed wholly outside the United

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Kingdom,

 

 

Income Tax (Earnings and Pensions) Bill
Part 5 — Employment income: deductions allowed from earnings
Chapter 5 — Deductions for earnings representing benefits or reimbursed expenses

    190

 

           (b)           the employee is resident and ordinarily resident in the United

Kingdom,

           (c)           in a case where the employer is a foreign employer, the employee is

domiciled in the United Kingdom, and

           (d)           the earnings include an amount in respect of—

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                  (i)                 the provision of accommodation or subsistence outside the

United Kingdom for the employee for the purpose of enabling

the employee to perform the duties of the employment, or

                  (ii)                the reimbursement of expenses incurred by the employee on

such accommodation or subsistence for that purpose.

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     (2)    If the accommodation or subsistence is wholly for that purpose, the deduction

is equal to the included amount.

     (3)    If the accommodation or subsistence is only partly for that purpose, the

deduction is equal to so much of the included amount as is properly

attributable to that purpose.

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Personal security assets and services

 377   Costs and expenses in respect of personal security assets and services

     (1)    This section applies if—

           (a)           there is a special threat to an employee’s personal physical security

which arises wholly or mainly because of the employee’s employment,

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           (b)           an asset or service which improves personal security is provided for or

used by the employee to meet the threat,

           (c)           the employee’s earnings include an amount in respect of—

                  (i)                 the provision or use, or

                  (ii)                expenses connected with it,

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                         because the whole or part of the cost of the provision or use is borne, or

the expenses are reimbursed to the employee, by or on behalf of

another person (“the provider”), and

           (d)           the provider’s sole object in bearing the whole or part of the cost or

reimbursing the expenses is meeting the threat.

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     (2)    In the case of such an asset, if the provider intends it to be used solely for the

purpose of improving personal physical security, a deduction equal to the

included amount is allowed.

     (3)    If the provider intends the asset to be used solely to improve personal physical

security, any use of the asset incidental to that purpose is ignored.

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     (4)    If the provider intends the asset to be used only partly to improve personal

physical security, a deduction equal to the proportion of the included amount

attributable to the intended use for that purpose is allowed.

     (5)    In determining whether or not this section applies in relation to an asset, it does

not matter if—

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           (a)           the asset becomes fixed to land (even a dwelling or grounds), or

           (b)           the employee is or becomes entitled—

                  (i)                 to the property in the asset, or

                  (ii)                if the asset is a fixture, to any estate or interest in the land

concerned.

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Income Tax (Earnings and Pensions) Bill
Part 5 — Employment income: deductions allowed from earnings
Chapter 6 — Deductions from seafarers’ earnings

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     (6)    In the case of a service within subsection (1), if the benefit resulting to the

employee consists wholly or mainly of an improvement of the employee’s

personal physical security, a deduction equal to the included amount is

allowed.

     (7)    The fact that an asset or a service improves the personal physical security of a

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member of the employee’s family or household, as well as that of the

employee, does not prevent a deduction being allowed.

     (8)    In this section—

                    “asset” includes equipment or a structure (such as a wall), but not a car,

ship or aircraft or a dwelling or grounds appurtenant to a dwelling, and

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                    “service” does not include a dwelling or grounds appurtenant to a

dwelling.

Chapter 6

Deductions from seafarers’ earnings

 378   Deduction from seafarers’ earnings: eligibility

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     (1)    A deduction is allowed from earnings from an employment as a seafarer if—

           (a)           the earnings are taxable earnings under section 15 or 21 (earnings for

year when employee resident and ordinarily resident in UK),

           (b)           the duties of the employment are performed wholly or partly outside

the United Kingdom, and

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           (c)           any of those duties are performed in the course of an eligible period.

     (2)    In this Chapter “eligible period” means a period consisting of at least 365 days

which is either—

           (a)           a period of consecutive days of absence from the United Kingdom, or

           (b)           a combined period.

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     (3)    A combined period is a period—

           (a)           at least half of the days in which are days of absence from the United

Kingdom, and

           (b)           which consists of 3 consecutive periods, A, B and C, where—

                    A            is a period of consecutive days of absence from the United Kingdom or

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a period which is itself a combined period,

                    B            is a period of not more than 183 days, and

                    C            is a period of consecutive days of absence from the United Kingdom.

     (4)    For this purpose a person is only regarded as being absent from the United

Kingdom on any day if absent at the end of the day.

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 379   Calculating the deduction

     (1)    The deduction under section 378

           (a)           is allowed from the amount of the earnings from the employment

attributable to the eligible period, and

           (b)           is equal to that amount.

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     (2)    Earnings from the employment for a period of leave immediately after the

eligible period are to be regarded as earnings attributable to the eligible period

 

 

Income Tax (Earnings and Pensions) Bill
Part 5 — Employment income: deductions allowed from earnings
Chapter 6 — Deductions from seafarers’ earnings

    192

 

     (2)    if or to the extent that they are earnings for the tax year in which the eligible

period ends.

     (3)    This section is subject to section 380 (limit on deduction where UK duties etc.

make amount unreasonable).

 380   Limit on deduction where UK duties etc. make amount unreasonable

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     (1)    If—

           (a)           section 378 (deduction from seafarers’ earnings: eligibility) applies to

earnings for a tax year, and

           (b)           in the tax year the employee performs some of the duties of the

employment as a seafarer or of any associated employments in the

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United Kingdom,

            the amount of earnings in respect of which the deduction under this Chapter is

allowed is subject to the following limitation.

     (2)    The amount is restricted to the proportion of the aggregate earnings for that

year from the employment as a seafarer and all associated employments that is

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reasonable having regard to—

           (a)           the nature of and time devoted to the duties performed outside and in

the United Kingdom, and

           (b)           all other relevant circumstances.

     (3)    In this section “associated employments” means employments with the same

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employer or with associated employers.

     (4)    The same rules for determining whether employers are associated apply for

the purposes of this section as apply for section 24(4) (limit on chargeable

overseas earnings where duties of associated employment performed in UK)

(see section 24(5)).

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 381   Taking account of other deductions

For the purposes of sections 379 and 380, the amount of the earnings from an

employment for a tax year is the amount remaining after any deductions under

           (a)           section 232 (giving effect to mileage allowance relief),

           (b)           Chapter 2, 3, 4 or 5 of this Part,

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           (c)           section 592(7) of ICTA (contributions to exempt approved schemes),

           (d)           section 594(1) of ICTA (contributions to exempt statutory schemes),

and

           (e)           section 262 of CAA 2001 (capital allowances to be given effect by

treating them as deductions from earnings).

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 382   Duties on board ship

     (1)    Duties which a person performs on a ship engaged—

           (a)           on a voyage beginning or ending outside the United Kingdom (but

excluding any part of it beginning and ending in the United Kingdom),

or

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           (b)           on a part beginning or ending outside the United Kingdom of any other

voyage,

            are treated as performed outside the United Kingdom for the purposes of this

Chapter.

 

 

Income Tax (Earnings and Pensions) Bill
Part 6 — Employment income: income which is not earnings or share-related
Chapter 1 — Payments to non-approved pension schemes

    193

 

     (2)    For this purpose the areas designated under section 1(7) of the Continental

Shelf Act 1964 (c. 29) are treated as part of the United Kingdom.

     (3)    Subsection (1) applies despite anything to the contrary in section 40 (duties on

board vessel or aircraft).

 383   Place of performance of incidental duties

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     (1)    For the purposes of section 378(1)(b) (deduction from seafarers’ earnings:

eligibility), duties of an employment as a seafarer which are performed outside

the United Kingdom are treated as performed in the United Kingdom if

conditions A and B are met.

     (2)    Condition A is that in the tax year in which the duties are performed the

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employment is in substance one whose duties fall to be performed in the

United Kingdom.

     (3)    Condition B is that the performance of the duties performed outside the United

Kingdom is merely incidental to the performance of duties in the United

Kingdom.

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     (4)    Section 39 (duties in UK merely incidental to duties outside UK) does not affect

the question—

           (a)           where any duties are performed, or

           (b)           whether a person is absent from the United Kingdom,

            for the purposes of section 378(1) to (3).

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 384   Meaning of employment “as a seafarer”

In this Chapter employment “as a seafarer” means an employment consisting

of the performance of duties on a ship or of such duties and others incidental

to them.

 385   Meaning of “ship”

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In this Chapter “ship” does not include—

           (a)           any offshore installation within the meaning of the Mineral Workings

(Offshore Installations) Act 1971 (c.61), or

           (b)           what would be such an installation if the references in that Act to

controlled waters were to any waters.

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Part 6

Employment income: income which is not earnings or share-related

Chapter 1

Payments to non-approved pension schemes

 386   Charge on payments to non-approved retirement benefits schemes

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     (1)    A sum paid by an employer—

           (a)           in accordance with a non-approved retirement benefits scheme, and

           (b)           with a view to the provision of relevant benefits for or in respect of an

employee of the employer,

 

 

Income Tax (Earnings and Pensions) Bill
Part 6 — Employment income: income which is not earnings or share-related
Chapter 1 — Payments to non-approved pension schemes

    194

 

            counts as employment income of the employee for the relevant tax year.

     (2)    The “relevant tax year” is the tax year in which the sum is paid.

     (3)    Subsection (1) does not apply if or to the extent that the sum is chargeable to

income tax as the employee’s income apart from this section.

     (4)    But if, apart from this section, the payment of the sum would be a payment to

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which Chapter 3 of this Part (payments and benefits on termination of

employment etc.) would apply, subsection (1) applies to the sum (and

accordingly that Chapter does not apply to it).

     (5)    In this Chapter—

           (a)           “employee”               includes a person who is to be or has been an employee,

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           (b)           section 5(1) (application to offices) does not apply, but “employee”, in

relation to a company, includes any officer or director of the company

and any other person taking part in the management of the affairs of the

company,

           (c)           “employer” and “employment” have meanings corresponding to the

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meaning of “employee” given by paragraphs (a) and (b),

           (d)           “director” has the meaning given by section 612(1) of ICTA, and

           (e)           “relevant benefits” has the meaning given by that section and section

612(2) of ICTA applies to references in this Chapter to the provision of

relevant benefits as it applies to such references in Chapter 1 of Part 14

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of ICTA.

     (6)    For the purposes of this Chapter benefits are provided in respect of an

employee if they are provided for the employee’s spouse, widow or widower,

children, dependants or personal representatives.

     (7)    Any liability to tax arising by virtue of this section is subject to the reliefs given

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under—

           (a)           section 392 (relief where no benefits are paid or payable), and

           (b)           section 266A of ICTA (life assurance premiums paid by employer).

 387   Meaning of “non-approved retirement benefits scheme”

     (1)    In this Chapter “retirement benefits scheme” has the meaning given by section

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611 of ICTA.

     (2)    For the purposes of this Chapter, a retirement benefits scheme is “non-

approved” unless it is—

           (a)           an approved scheme,

           (b)           a relevant statutory scheme, or

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           (c)           a scheme set up by a government outside the United Kingdom for the

benefit of its employees or primarily for their benefit.

     (3)    In this section—

                    “approved scheme” has the meaning given by section 612(1) of ICTA, and

                    “relevant statutory scheme” has the meaning given by section 611A of

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ICTA.

 

 

 
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