|
| |
| |
Expenses incidental to sale etc. of asset | |
326 Expenses incidental to transfer of a kind not normally met by transferor | |
(1) No liability to income tax arises by virtue of the payment or reimbursement of | |
expenses which— | |
(a) are incidental to, and incurred wholly and exclusively as a result of, an | 5 |
employment-related asset transfer, and | |
(b) are of a kind not normally met by the transferor. | |
(2) There is an “employment-related asset transfer” if— | |
(a) an asset or the beneficial interest in an asset is transferred to an | |
employee’s employer or a person nominated by the employer, and | 10 |
(b) the right or opportunity to make the transfer arose by reason of the | |
employment. | |
(3) In this section references to a transfer are to a sale or any other kind of disposal. | |
Part 5 | |
Employment income: deductions allowed from earnings | 15 |
Chapter 1 | |
Deductions allowed from earnings: general rules | |
Introduction | |
327 Deductions from earnings: general | |
(1) This Part provides for deductions that are allowed from the taxable earnings | 20 |
from an employment in a tax year in calculating the net taxable earnings from | |
the employment in the tax year for the purposes of Part 2 (see section 11(1)). | |
(2) In this Part, unless otherwise indicated by the context— | |
(a) references to the earnings from which deductions are allowed are | |
references to the taxable earnings mentioned in subsection (1), and | 25 |
(b) references to the tax year are references to the tax year mentioned there. | |
(3) The deductions for which this Part provides are those allowed under— | |
Chapter 2 (deductions for employee’s expenses), | |
Chapter 3 (deductions from benefits code earnings), | |
Chapter 4 (fixed allowances for employee’s expenses), | 30 |
Chapter 5 (deductions for earnings representing benefits or reimbursed | |
expenses), and | |
Chapter 6 (deductions from seafarers’ earnings). | |
(4) Further provision about deductions from earnings is made in— | |
section 232 (giving effect to mileage allowance relief), | 35 |
section 619 of ICTA (contributions under retirement annuity contracts), | |
and | |
section 262 of CAA 2001 (capital allowances to be given effect by treating | |
them as deductions from earnings). | |
| |
| |
|
| |
| |
(5) Further provision about deductions from income including earnings is made | |
in— | |
Part 12 (payroll giving), | |
section 592(7) of ICTA (contributions to exempt approved schemes), and | |
section 594(1) of ICTA (contributions to exempt statutory schemes). | 5 |
General rules | |
328 The income from which deductions may be made | |
(1) The general rule is that deductions under this Part are allowed— | |
(a) from any earnings from the employment in question, and | |
(b) not from earnings from any other employment. | 10 |
This is subject to subsections (2) to (4). | |
(2) Deductions under section 351 (expenses of ministers of religion) are allowed | |
from earnings from any employment as a minister of a religious denomination. | |
(3) Deductions under section 368 (fixed sum deductions from earnings payable | |
out of public revenue) are allowed only from earnings payable out of the public | 15 |
revenue. | |
(4) Deductions limited to specified earnings (see subsection (5)) are allowed— | |
(a) only from earnings from the employment that are taxable earnings | |
under certain of the charging provisions of Chapters 4 and 5 of Part 2, | |
and | 20 |
(b) not from other earnings from it. | |
(5) “Deductions limited to specified earnings” are deductions under— | |
sections 336 to 342 (deductions from earnings charged on receipt: see | |
sections 335(2) and 354), | |
section 353 (deductions from earnings charged on remittance), | 25 |
sections 370 to 374 (travel deductions from earnings charged on receipt), | |
and | |
Chapter 6 of this Part (deductions from seafarers’ earnings: see section | |
378(1)(a)). | |
329 Deductions from earnings not to exceed earnings | 30 |
(1) The amount of a deduction allowed under this Part may not exceed the | |
earnings from which it is deductible. | |
(2) If two or more deductions allowed under this Part are deductible from the | |
same earnings, the amounts deductible may not in aggregate exceed those | |
earnings. | 35 |
(3) If deductions allowed otherwise than under this Part fall to be allowed from | |
the same earnings as amounts deductible under this Part, the amounts | |
deductible under this Part may not exceed the earnings remaining after the | |
other deductions. | |
(4) Subsections (1) and (2) do not apply to a deduction under section 351 (expenses | 40 |
of ministers of religion), and subsection (3) applies as if such a deduction were | |
allowed otherwise than under this Part. | |
| |
| |
|
| |
| |
(5) This section is to be disregarded for the purposes of the deductibility | |
provisions (see section 332). | |
(6) See also section 380 of ICTA (which provides that where a loss in an | |
employment is sustained, relief may be given against other income). | |
330 Prevention of double deductions | 5 |
(1) A deduction from earnings under this Part is not allowed more than once in | |
respect of the same costs or expenses. | |
(2) If apart from this subsection— | |
(a) a deduction would be allowed under Chapter 4 of this Part (fixed | |
allowances for employee’s expenses) for a sum fixed by reference to | 10 |
any kind of expenses, and | |
(b) the employee would be entitled under another provision to a deduction | |
for an amount paid in respect of the same kind of expenses, | |
only one of those deductions is allowed. | |
331 Order for making deductions | 15 |
(1) This Part needs to be read with section 835(3) and (4) of ICTA (general rule that | |
deductions are to be allowed in the order resulting in the greatest reduction of | |
liability to income tax). | |
(2) In the case of deductions under this Part, the general rule in that section is | |
subject to— | 20 |
(a) section 23(3) (which requires certain deductions to be made in order to | |
establish “chargeable overseas earnings”), and | |
(b) section 381 (which requires deductions under other provisions to be | |
taken into account before deductions under Chapter 6 of this Part | |
(seafarers)). | 25 |
332 Meaning of “the deductibility provisions” | |
For the purposes of this Part, “the deductibility provisions” means the | |
following provisions (which refer to amounts or expenses that would be | |
deductible if they were incurred and paid by an employee)— | |
the definition of “business travel” in section 171(1) (definitions for | 30 |
Chapter 6 of Part 3), | |
section 179(6) (exception for certain advances for necessary expenses), | |
the definition of “business travel” in section 236(1) (definitions for | |
Chapter 2 of Part 4), | |
section 240(1)(c) and (5) (exemption of incidental overnight expenses and | 35 |
benefits), | |
section 252(3) (exception from exemption of work-related training | |
provision for non-deductible travel expenses), | |
section 257(3) (exception from exemption for individual learning account | |
training provision for non-deductible travel expenses), | 40 |
section 305(5) (offshore oil and gas workers: mainland transfers), | |
section 310(6)(b) (counselling and other outplacement services), | |
section 311(5)(b) (retraining courses), | |
| |
| |
|
| |
| |
section 361(b) (scope of Chapter 3 of this Part: cost of benefits deductible | |
as if paid by employee), | |
section 362(1)(c) and (2)(b) (deductions where non-cash voucher | |
provided), | |
section 363(1)(b) and (2)(b) (deductions where credit-token provided), | 5 |
section 364(1)(b) and (2) (deductions where living accommodation | |
provided), | |
section 365(1)(b) and (2) (deductions where employment-related benefit | |
provided). | |
Chapter 2 | 10 |
Deductions for employee’s expenses | |
Introduction | |
333 Scope of this Chapter: expenses paid by the employee | |
(1) A deduction from a person’s earnings for an amount is allowed under the | |
following provisions of this Chapter only if the amount— | 15 |
(a) is paid by the person, or | |
(b) is paid on the person’s behalf by someone else and is included in the | |
earnings. | |
(2) In the following provisions of this Chapter, in relation to a deduction from a | |
person’s earnings, references to the person paying an amount include | 20 |
references to the amount being paid on the person’s behalf by someone else if | |
or to the extent that the amount is included in the earnings. | |
(3) Subsection (1)(b) does not apply to the deductions under— | |
(a) section 351(2) and (3) (expenses of ministers of religion), and | |
(b) section 355 (deductions for corresponding payments by non-domiciled | 25 |
employees with foreign employers), | |
and subsection (2) does not apply in the case of those deductions. | |
(4) Chapter 3 of this Part provides for deductions where— | |
(a) a person’s earnings include an amount treated as earnings under | |
Chapter 4, 5 or 10 of Part 3 (taxable benefits: vouchers etc., living | 30 |
accommodation and residual liability to charge), and | |
(b) an amount in respect of the benefit in question would be deductible | |
under this Chapter if the person had incurred and paid it. | |
334 Effect of reimbursement etc. | |
(1) For the purposes of this Chapter, a person may be regarded as paying an | 35 |
amount despite— | |
(a) its reimbursement, or | |
(b) any other payment from another person in respect of the amount. | |
(2) But where a reimbursement or such other payment is made in respect of an | |
amount, a deduction for the amount is allowed under the following provisions | 40 |
of this Chapter only if or to the extent that— | |
(a) the reimbursement, or | |
| |
| |
|
| |
| |
(b) so much of the other payment as relates to the amount, | |
is included in the person’s earnings. | |
(3) This section does not apply to a deduction allowed under section 351 (expenses | |
of ministers of religion). | |
(4) This section is to be disregarded for the purposes of the deductibility | 5 |
provisions. | |
335 Application of deductions provisions: “earnings charged on receipt” and | |
“earnings charged on remittance” | |
(1) The availability of certain deductions under this Chapter depends on whether | |
the earnings are earnings charged on receipt or earnings charged on | 10 |
remittance. | |
(2) Sections 336 to 342— | |
(a) only apply if the earnings from which the deduction is to be made are | |
earnings charged on receipt, and | |
(b) apply subject to section 354(1) if the earnings from the employment also | 15 |
include other earnings. | |
(3) Section 353 (which provides for a deduction for expenses of the kind to which | |
sections 336 to 342 apply)— | |
(a) only applies if the earnings from which the deduction is to be made are | |
earnings charged on remittance, and | 20 |
(b) applies subject to section 354(2) if the earnings from the employment | |
also include other earnings. | |
(4) In this Part— | |
“earnings charged on receipt” means earnings which are taxable earnings | |
under section 15, 21, 25 or 27, and | 25 |
“earnings charged on remittance” means earnings which are taxable | |
earnings under section 22 or 26. | |
General rule for deduction of employee’s expenses | |
336 Deductions for expenses: the general rule | |
(1) The general rule is that a deduction from earnings is allowed for an amount | 30 |
if— | |
(a) the employee is obliged to incur and pay it as holder of the | |
employment, and | |
(b) the amount is incurred wholly, exclusively and necessarily in the | |
performance of the duties of the employment. | 35 |
(2) The following provisions of this Chapter contain additional rules allowing | |
deductions for particular kinds of expenses and rules preventing particular | |
kinds of deductions. | |
(3) No deduction is allowed under this section for an amount that is deductible | |
under sections 337 to 342 (travel expenses). | 40 |
| |
| |
|
