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Chapter 10 | |
Exemptions: termination of employment | |
Redundancy payments | |
309 Limited exemptions for statutory redundancy payments | |
(1) No liability to income tax in respect of earnings arises by virtue of a | 5 |
redundancy payment or an approved contractual payment, except where | |
subsection (2) applies. | |
(2) Where an approved contractual payment exceeds the amount which would | |
have been due if a redundancy payment had been payable, the excess is liable | |
to income tax. | 10 |
(3) No liability to income tax in respect of employment income other than earnings | |
arises by virtue of a redundancy payment or an approved contractual | |
payment, except where it does so by virtue of Chapter 3 of Part 6 (payments | |
and benefits on termination of employment etc.). | |
(4) For the purposes of this section— | 15 |
(a) a statutory payment in respect of a redundancy payment is to be treated | |
as paid on account of the redundancy payment, and | |
(b) a statutory payment in respect of an approved contractual payment is | |
to be treated as paid on account of the approved contractual payment. | |
(5) In this section— | 20 |
“approved contractual payment” means a payment to a person on the | |
termination of the person’s employment under an agreement in respect | |
of which an order is in force under section 157 of ERA 1996 or Article | |
192 of ER(NI)O 1996, | |
“redundancy payment” means a redundancy payment under Part 11 of | 25 |
ERA 1996 or Part 12 of ER(NI)O 1996, and | |
“statutory payment” means a payment under section 167(1) of ERA 1996 | |
or Article 202(1) of ER(NI)O 1996. | |
(6) In subsection (5) “employment”, in relation to a person, has the meaning given | |
in section 230(5) of ERA 1996 or Article 3(5) of ER(NI)O 1996. | 30 |
Outplacement benefits | |
310 Counselling and other outplacement services | |
(1) No liability to income tax arises in respect of— | |
(a) the provision of services to a person in connection with the cessation of | |
the person’s employment, or | 35 |
(b) the payment or reimbursement of— | |
(i) fees for such provision, or | |
(ii) travelling expenses incurred in connection with such provision, | |
if conditions A to D and, in the case of travel expenses, condition E are met. | |
(2) Condition A is that the only or main purpose of the provision of the services is | 40 |
to enable the person to do either or both of the following— | |
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(a) to adjust to the cessation of the employment, or | |
(b) to find other gainful employment (including self-employment). | |
(3) Condition B is that the services consist wholly of any or all of the following— | |
(a) giving advice and guidance, | |
(b) imparting or improving skills, | 5 |
(c) providing or making available the use of office equipment or similar | |
facilities. | |
(4) Condition C is that the person has been employed full-time in the employment | |
which is ceasing throughout the period of 2 years ending— | |
(a) at the time when the services begin to be provided, or | 10 |
(b) if earlier, at the time when the employment ceases. | |
(5) Condition D is that the opportunity to receive the services, on similar terms as | |
to payment or reimbursement of any expenses incurred in connection with | |
their provision, is available— | |
(a) generally to employees or former employees of the person’s employer | 15 |
in that employment, or | |
(b) to a particular class or classes of them. | |
(6) Condition E is that the travel expenses are expenses— | |
(a) in respect of which, on the assumptions in subsection (7), mileage | |
allowance relief under Chapter 2 of this Part would be available if no | 20 |
mileage allowance payments had been made, or | |
(b) which, on those assumptions, would be deductible under Part 5. | |
(7) The assumptions are— | |
(a) that receiving the services is one of the duties of the employee’s | |
employment, | 25 |
(b) that the employee incurs and pays the expenses, and | |
(c) if the employment has in fact ceased, that it continues. | |
(8) In this section “mileage allowance payments” has the meaning given by section | |
229(2). | |
311 Retraining courses | 30 |
(1) No liability to income tax arises in respect of the payment or reimbursement of | |
retraining course expenses by a person (“the employer”) if the course | |
conditions, the employment conditions and, in the case of travel expenses, the | |
conditions in subsection (5) are met. | |
(2) In subsection (1) “retraining course expenses” means— | 35 |
(a) fees for the attendance of another person (“the employee”) at a training | |
course, | |
(b) travelling expenses incurred in connection with it, | |
(c) fees for an examination taken during or at the end of it, or | |
(d) the cost of any books which are essential for a person attending it. | 40 |
(3) The course conditions are that— | |
(a) the course provides training designed to impart or improve skills or | |
knowledge relevant to, and intended to be used in the course of, gainful | |
employment (including self-employment) of any description, | |
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(b) it is entirely devoted to the teaching or practical application (or both) of | |
the skills or knowledge, | |
(c) it lasts no more than one year, and | |
(d) the employee attends it on a full-time or substantially full-time basis. | |
(4) The employment conditions are that— | 5 |
(a) the employee begins the course while employed by the employer or | |
within the period of one year after the employment ceases, | |
(b) the employee ceases to be employed by the employer before the end of | |
the period of 2 years beginning at the end of the course and is not re- | |
employed by the employer within the period of 2 years after so ceasing, | 10 |
(c) the employee is employed full-time in the employment which is | |
ceasing throughout the period of 2 years ending— | |
(i) when the employee begins the course, or | |
(ii) if earlier, when the employment ceases, and | |
(d) the opportunity to undertake the course, on similar terms as to | 15 |
payment or reimbursement of amounts within subsection (1), is | |
available— | |
(i) generally to the employee’s fellow employees or former fellow | |
employees in that employment, or | |
(ii) to a particular class or classes of them. | 20 |
(5) The travel expenses must be— | |
(a) expenses in respect of which, on the assumptions in subsection (6), | |
mileage allowance relief under Chapter 2 of this Part would be | |
available if no mileage allowance payments had been made, or | |
(b) expenses which, on those assumptions, would be deductible under Part | 25 |
5. | |
(6) The assumptions are— | |
(a) that attendance at the course is one of the duties of the employee’s | |
employment, | |
(b) that the employee incurs and pays the expenses, and | 30 |
(c) if the employee has in fact ceased to be employed by the employer, that | |
the employee continues to be employed by the employer. | |
(7) In this section “mileage allowance payments” has the meaning given by section | |
229(2). | |
312 Recovery of tax | 35 |
(1) This section applies if— | |
(a) a person’s liability to tax for a tax year has been determined on the | |
assumption that section 311(1) applies, and | |
(b) subsequently— | |
(i) the condition in section 311(4)(a) is not met because of the | 40 |
person’s failure to begin the course within the period of one | |
year after ceasing to be employed, or | |
(ii) the condition in section 311(4)(b) is not met because of the | |
person’s continued employment or re-employment. | |
(2) An assessment of an amount or further amount of tax due as a result of the | 45 |
condition not being met may be made under section 29(1) of TMA 1970. | |
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(3) Such an assessment must be made before the end of the period of 6 years | |
immediately following the end of the tax year in which subsection (1) first | |
applies. | |
(4) If subsection (1)(b)(i) or (ii) applies, the person’s employer or former employer | |
must give the Inland Revenue a notice containing particulars of the person’s | 5 |
failure to begin the course or continued employment or re-employment within | |
60 days of coming to know of it. | |
(5) If the Inland Revenue have reason to believe that a person has failed to give | |
such a notice, they may by notice require the person to provide such | |
information as they may reasonably require for the purposes of this section | 10 |
about— | |
(a) the failure to begin the course, | |
(b) the continued employment, or | |
(c) the re-employment. | |
(6) A notice under subsection (5) may specify a time (not less than 60 days) within | 15 |
which the required information must be provided. | |
Chapter 11 | |
Miscellaneous exemptions | |
Living accommodation | |
313 Repairs and alterations to living accommodation | 20 |
(1) This section applies where living accommodation is provided by reason of a | |
person’s employment. | |
(2) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable | |
benefits: residual liability to charge) in respect of— | |
(a) alterations and additions to the premises which are of a structural | 25 |
nature, or | |
(b) landlord’s repairs to the premises. | |
(3) In this section “landlord’s repairs” means repairs of a kind which are the | |
obligation of the lessor under the covenants implied by section 11(1) of the | |
Landlord and Tenant Act 1985 (c. 70) (lessor’s repairing obligations in short | 30 |
leases) where premises are let under a lease to which that section applies. | |
314 Council tax etc. paid for certain living accommodation | |
(1) This section applies if living accommodation provided for an employee falls | |
within the exception in one of the following provisions— | |
section 99(1) (accommodation necessary for proper performance of | 35 |
duties), | |
section 99(2) (accommodation provided for better performance of duties), | |
or | |
section 100 (accommodation provided as a result of security threat). | |
(2) No liability to income tax arises by virtue of— | 40 |
(a) any payment to, for or on behalf of the employee, or | |
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(b) any reimbursement of any payment by the employee, | |
in respect of council tax or rates, or water or sewerage charges, in respect of the | |
accommodation. | |
315 Limited exemption for expenses connected with certain living | |
accommodation | 5 |
(1) This section applies if— | |
(a) living accommodation is provided for an employee in a tax year, and | |
(b) conditions A and B are met. | |
(2) Condition A is that the accommodation falls within the exception in one of the | |
following provisions— | 10 |
section 99(1) (accommodation necessary for proper performance of | |
duties), | |
section 99(2) (accommodation provided for better performance of duties), | |
or | |
section 100 (accommodation provided as result of security threat). | 15 |
(3) Condition B is that there is an amount of earnings from the employment in the | |
tax year by virtue of expenditure, or the reimbursement to the employee of | |
expenditure, on— | |
(a) heating, lighting or cleaning the premises, | |
(b) repairs to the premises, their maintenance or decoration, or | 20 |
(c) the provision in the premises of furniture, equipment or other items | |
which are normal for domestic occupation. | |
(4) If this section applies, no liability to income tax arises in respect of the earnings | |
mentioned in subsection (3) to the extent that they exceed—![equation: plus[id[cross[times[num[10.00000000,"10"],string["%"]],times[char[N],cross[char[
E],over[times[char[D],char[A]],times[char[D],char[E]]]]]]],minus[times[char[S],char[
M],char[G]]]]](missing.gif) | |
where— | 25 |
DA is the number of reckonable days in the tax year (a “reckonable day” | |
being a day on which— | |
(a) the accommodation is provided, and | |
(b) the employment is held by the employee), | |
DE is— | 30 |
(a) the number of days in that year, or | |
(b) if the employment is held for only part of that year, the number | |
of days in that part, | |
NE is the net amount of the earnings from the employment in the tax year | |
(see subsection (5)), | 35 |
SMG is, where the expenses are incurred by a person other than the | |
employee, so much of any sum made good by the employee to that | |
other person as is properly attributable to the expenses. | |
(5) To calculate the net amount of the earnings from the employment— | |
Step 1 | 40 |
Take the earnings from the employment, leaving out of account the expenses | |
in question. | |
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Step 2 | |
Add, in the case of employment by a company, the earnings from any | |
employment by an associated company. | |
A company is “associated” with another for this purpose if one has control of | |
the other or both are under the control of the same person. | 5 |
Step 3 | |
Deduct any deductions allowable under— | |
(a) section 232 (giving effect to mileage allowance relief) or Part 5 of this | |
Act, | |
(b) section 262 of CAA 2001 (capital allowances to be given effect by | 10 |
treating them as deductions from earnings), or | |
(c) section 592(7), 594 or 619(1)(a) of ICTA. | |
Work accommodation, supplies etc. | |
316 Accommodation, supplies and services used in employment duties | |
(1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable | 15 |
benefits: residual liability to charge) in respect of the provision for an employee | |
of accommodation, supplies or services used by the employee in performing | |
duties of the employment if conditions A and B are met. | |
(2) Condition A is that any use of the accommodation, supplies or services for | |
private purposes by the employee or members of the employee’s family or | 20 |
household is not significant. | |
(3) For this purpose, use “for private purposes” means— | |
(a) use that is not use in performing the duties of the employee’s | |
employment, and | |
(b) use that is at the same time both use in performing the duties of an | 25 |
employee’s employment and other use. | |
(4) Condition B is that where the provision is otherwise than on premises occupied | |
by the person making it— | |
(a) its sole purpose is to enable the employee to perform the duties of the | |
employee’s employment, and | 30 |
(b) what is provided is not an excluded benefit. | |
(5) The following are excluded benefits unless regulations under subsection (6) | |
provide otherwise— | |
(a) a motor vehicle, boat or aircraft, and | |
(b) a benefit that involves— | 35 |
(i) the extension, conversion or alteration of living | |
accommodation, or | |
(ii) the construction, extension, conversion or alteration of a | |
building or other structure on land adjacent to and enjoyed with | |
such accommodation. | 40 |
(6) The Treasury may make provision by regulations as to what is an excluded | |
benefit for the purposes of subsection (4)(b). | |
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(7) The regulations may provide that a benefit is an excluded benefit only if such | |
conditions as may be prescribed are met as to the terms on which, and persons | |
to whom, it is provided. | |
Workplace meals | |
317 Subsidised meals | 5 |
(1) No liability to income tax arises in respect of the provision for an employee by | |
the employer of free or subsidised meals if— | |
(a) they are provided in a canteen where meals are provided for the | |
employer’s employees generally or generally to those at a particular | |
location, or | 10 |
(b) they are provided on the employer’s business premises and conditions | |
A to C are met. | |
(2) Condition A is that the meals are provided on a reasonable scale. | |
(3) Condition B is that all the employer’s employees or all of them at a particular | |
location may obtain one or both of the following— | 15 |
(a) a free or subsidised meal, or | |
(b) a free or subsidised meal voucher or token. | |
(4) Condition C is that if the meals are provided in the restaurant or dining room | |
of a hotel or a catering or similar business at a time when meals are being | |
served to the public— | 20 |
(a) part of the restaurant or dining room is designated for the use of | |
employees only, and | |
(b) the meals are taken in that part. | |
(5) In this section “free or subsidised meal voucher or token” means a voucher, | |
ticket, pass or other document or token which— | 25 |
(a) is intended to enable a person to obtain a meal, and | |
(b) is provided to the employee free of charge or for less than the cost of the | |
meals to be obtained by it. | |
(6) In this section “meals” includes light refreshments. | |
Childcare | 30 |
318 Care for children | |
(1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable | |
benefits: residual liability to charge) in respect of the provision for an employee | |
of care for a child if conditions A to C are met. | |
(2) If those conditions are met only as respects part of the provision, no such | 35 |
liability arises in respect of that part. | |
(3) Condition A is that the child is under 18 and— | |
(a) is a child of the employee maintained at the employee’s expense, | |
(b) is resident with the employee, or | |
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