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Special rules for earnings with a foreign element | |
353 Deductions from earnings charged on remittance | |
(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— | 5 |
(a) any expenses— | |
(i) paid by the employee out of the earnings, or | |
(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 | 10 |
earlier tax year in which the employee has been resident in the United | |
Kingdom. | |
(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. | 15 |
(4) Where— | |
(a) any of the deductibility provisions refers to amounts or expenses that | |
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 | 20 |
amounts or expenses out of those earnings. | |
354 Disallowance of expenses relating to earnings taxed on different basis or | |
untaxed | |
(1) If the earnings from an employment for a tax year include both earnings | |
charged on receipt and other earnings (except earnings charged under section | 25 |
22), 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. | |
(2) If the earnings from an employment for a tax year include both earnings | |
charged on remittance under section 26 and other earnings, no deduction is | 30 |
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 | |
provisions. | 35 |
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. | |
(2) Condition A is that the employee is not domiciled in the United Kingdom. | 40 |
(3) Condition B is that the employment is with a foreign employer. | |
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(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 | |
United Kingdom income tax, but was made in circumstances corresponding to | |
those in which it would do so. | 5 |
(6) If the Board are satisfied that conditions A to D are met, they may allow the | |
payment as a deduction under this Chapter. | |
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 | 10 |
in providing entertainment or a gift in connection with the employer’s trade, | |
business, profession or vocation. | |
(2) Subsection (1) is subject to the exceptions in— | |
(a) section 357 (exception where employer’s expenses disallowed), and | |
(b) section 358 (other exceptions). | 15 |
(3) For the purposes of this section and those sections— | |
(a) “entertainment” includes hospitality of any kind, and | |
(b) expenses incurred in providing entertainment or a gift include | |
expenses incurred in providing anything incidental to the provision of | |
entertainment or a gift. | 20 |
357 Business entertainment and gifts: exception where employer’s expenses | |
disallowed | |
(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— | 25 |
(i) paid the amount to, or on behalf of, the employee, or | |
(ii) put it at the employee’s disposal, | |
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. | 30 |
(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, | |
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). | 35 |
(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 | |
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— | 40 |
(a) the employer is a tonnage tax company during the whole or part of the | |
tax year, and | |
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(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. | 5 |
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 | 10 |
(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 | 15 |
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 | 20 |
(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 | 25 |
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 | 30 |
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), | 35 |
“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). | 40 |
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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— | 5 |
(a) the House of Commons, | |
(b) the Scottish Parliament, | |
(c) the National Assembly for Wales, or | |
(d) the Northern Ireland Assembly. | |
(2) In this section “accommodation expenses” means expenses incurred in, or in | 10 |
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— | |
(a) the place where it sits, or | |
(b) the constituency or region which the member represents. | 15 |
Chapter 3 | |
Deductions from benefits code earnings | |
Introduction | |
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 | 20 |
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- | |
tokens), | |
(ii) Chapter 5 of Part 3 (taxable benefits: living accommodation), or | 25 |
(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 | |
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 | 30 |
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) | |
(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 | 35 |
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 | |
deductible from the earnings under Chapter 2 or 5 of this Part. | |
(2) The deduction is equal to the lesser of— | 40 |
(a) the amount treated as earnings, and | |
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(b) the amount that would have been so deductible. | |
363 Deductions where credit-token provided | |
(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 | 5 |
(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— | 10 |
(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 | 15 |
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. | 20 |
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 | 25 |
(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 | 30 |
accordance with sections 204 to 206. | |
Chapter 4 | |
Fixed allowances for employee’s expenses | |
Introduction | |
366 Scope of this Chapter: amounts fixed by Treasury | 35 |
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. | |
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