Legalize / United Kingdom / Public General Act

Income Tax (Earnings and Pensions) Act 2003

Type Public General Act

Publication 2003-03-06

Last updated 2026-03-15

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(a) adding a European location,

(b) removing a European location, or

Transport and subsistence for Government ministers etc.

295

(1) No liability to income tax arises in respect of the provision of transport or subsistence provided or made available by or on behalf of the Crown to—

(a) the holder of a ministerial office, or

(b) a member of the family or household of the holder of a ministerial office.

(2) No liability to income tax arises in respect of payments and reimbursements by or on behalf of the Crown of expenses incurred in connection with the provision of transport or subsistence to a person within subsection (1).

(3) “Ministerial office” means—

(a) an office in Her Majesty’s Government in the United Kingdom,

(b) any other office which is one of the offices and positions in respect of which salaries are payable under section 1 of the Ministerial and other Salaries Act 1975 (c. 27), and

(i) the Scotland Act 1998 (c. 46),

(ii) the Government of Wales Act 2006, or

(iii) the Northern Ireland Act 1998 (c. 47).

(4) In determining whether a particular person holds an office within subsection (3)(b), it is irrelevant whether or not a salary is paid or payable to that person under the Ministerial and other Salaries Act 1975.

(5) In this section references to the provision of transport to a person include references to—

(a) the provision or making available to that person of a vehicle with or without a driver,

(b) the provision of fuel for a vehicle provided or made available to that person, and

(6) In this section—

(a) “subsistence” includes food and drink and temporary living accommodation, and

(b) “vehicle” means a mechanically propelled road vehicle.

Armed forces

Armed forces' leave travel facilities

296

(1) No liability to income tax arises in respect of—

(a) the provision of travel facilities for a member of the armed forces of the Crown going on or returning from leave, or

(b) a payment made in respect of such travel.

(2) In subsection (1) “travel facilities” does not include a vehicle.

Armed forces' food, drink and mess allowances

297

(1) No liability to income tax arises in respect of allowances if—

(a) they are payable out of the public revenue to any description of members of the armed forces of the Crown, and

(b) the Treasury certifies that they are payable to them instead of food or drink normally supplied to members of the armed forces.

(2) No liability to income tax arises in respect of allowances if—

(a) they are payable out of the public revenue in respect of any description of members of the armed forces of the Crown, and

(b) the Treasury certifies that they are so payable as a contribution to the expenses of a mess.

Reserve and auxiliary forces' training allowances

298

No liability to income tax arises in respect of the following sums if they are payable out of the public revenue to members of the reserve and auxiliary forces of the Crown—

(a) training expenses allowances, and

(b) bounties payable in consideration of the members undertaking certain training and attaining a particular standard of efficiency.

Crown employees

Crown employees' foreign service allowances

299

(1) No liability to income tax arises in respect of an allowance paid to a person in employment under the Crown if it is certified to represent compensation for the extra cost of being obliged to live outside the United Kingdom in order to perform the duties of the employment.

(2) A certificate under subsection (1) may only be given by—

(a) the Treasury,

(b) the Secretary of State,

(d) the Chancellor of the Exchequer,

(e) the Minister for the Civil Service,

(f) the Lord President of the Council,

(g) the Lord Privy Seal, or

(h) the Attorney General.

Consuls, foreign agents etc.

Consuls

300

(1) No liability to income tax arises in respect of income arising from the office of a consul in the United Kingdom in the service of a foreign state.

(2) Such income is also to be disregarded in estimating the amount of income for any income tax purposes.

(3) In this section “consul” means a person recognised by Her Majesty as being a consul-general, consul, vice-consul or consular agent.

Official agents

301

(1) No liability to income tax arises in respect of income arising from employment as an official agent in the United Kingdom for a foreign state if conditions A and B are met.

(2) Condition A is that the employee is neither—

(a) a Commonwealth citizen, nor

(b) a citizen of the Republic of Ireland.

(3) Condition B is that the functions of the employment are not exercised in connection with a trade, business or other undertaking carried on for the purposes of profit.

(4) Such income is also to be disregarded in estimating the amount of income for any income tax purposes.

(5) In this section “official agent” means a person who is not a consul (as defined in section 300) but is employed on the staff of—

(a) a consulate, or

(b) an official department or agency of a foreign state.

(6) Subsection (5)(b) does not apply to a department or agency which carries on a trade, business or other undertaking for the purposes of profit.

Consular employees

302

(1) No liability to income tax arises in respect of income arising from employment in the United Kingdom as a consular employee for a foreign state if—

(a) Her Majesty by Order in Council directs that this section applies to the foreign state for the purpose of giving effect to a reciprocal arrangement with that state, and

(b) condition A or B is met.

(2) Condition A is that the employee is a national of the foreign state.

(3) Condition B is that the employee is not a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen.

(4) In this section—

“consular employee” includes any person employed for the purposes of the official business of a consular officer at—any consulate,any consular establishment, orany other premises used for those purposes, and

“reciprocal arrangement” means a consular convention or other arrangement with a foreign state, making similar provision to that made by this section , sections 646A and 681A of this Act and section 771 of ITTOIA 2005 (relevant foreign income of consular officers and employees) in the case of Her Majesty’s consular officers or employees in that state.

(5) An Order in Council under subsection (1) may limit the operation of this section in relation to a state in any way appearing to Her Majesty necessary or expedient having regard to the arrangement with the state.

(6) Such an Order—

(a) may be made so as to have effect from a date earlier than that on which it is made, but not earlier than the arrangement in question comes into force, and

(b) may contain such transitional provisions as appear to Her Majesty necessary or expedient.

(7) A statutory instrument containing such an Order is subject to annulment in pursuance of a resolution of the House of Commons.

(8) This section does not affect section 301 (official agents).

Visiting forces and staff of designated allied headquarters

303

(1) No liability to income tax arises in respect of earnings if—

(a) they are paid by the government of a designated country to a member of a visiting force of that country or of a civilian component of such a force, and

(b) that person is not a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen.

(2) For the purposes of subsection (1)—

(a) members of the armed forces of a designated country who are attached to a designated international military headquarters are treated as a visiting force of that country, and

(b) whether a person is a member of a civilian component of such a force is to be determined accordingly.

(3) No liability to income tax arises in respect of earnings if they are paid by a designated allied headquarters to an employee of a category for the time being agreed between Her Majesty’s government in the United Kingdom and the other members of the North Atlantic Council.

(4) But where the employee is a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen, subsection (3) only applies if it is necessary for it to do so to give effect to an agreement between parties to the North Atlantic Treaty.

(4A) No liability to income tax arises in respect of earnings if—

(a) they are paid by the government of a designated country to a person belonging to the EU civilian staff, and

(b) that person is not a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen.

(5) Subsections (1) and (2) are to be interpreted as if—

(a) they were in Part 1 of the Visiting Forces Act 1952 (c. 67), and

(b) references in that Act to a country to which a provision of that Act applies were references to a designated country.

(6) In this section—

“allied headquarters” means an international military headquarters established under the North Atlantic Treaty, ...

“designated” means designated for the purpose in question by or under an Order in Council made for giving effect to an international agreement, and

“the EU civilian staff” means designated for the purpose in question by or under an Order in Council made for giving effect to an international agreement.civilian personnel seconded by a member State to an EU institution for the purposes of activities (including exercises) relating to the preparation for, and execution of, tasks mentioned in Article 43(1) of the Treaty on European Union (tasks relating to a common security and defence policy), as amended from time to time, andcivilian personnel (other than locally hired personnel)—made available to the EU by a member State to work with designated international military headquarters or a force of a designated country, orotherwise made available to the EU by a member State for the purposes of activities of the kind referred to in paragraph (a).

Detached national experts

Experts seconded to European Commission

304

(1) No liability to income tax arises in respect of daily subsistence allowances paid by the European Commission to persons whose services are made available to the Commission by their employers under the detached national experts scheme.

(2) “The detached national experts scheme” means—

(a) the scheme relating to national experts seconded to the European Commission which was established by the Commission on 26th July 1988, as it has effect for the time being, or

(b) any scheme having effect for the time being which replaces that scheme.

Offshore oil and gas workers

Offshore oil and gas workers: mainland transfers

305

(1) No liability to income tax arises in respect of—

(a) the provision for an employee who has a permanent workplace at an offshore installation of—

(i) transfer transport,

(ii) related accommodation and subsistence, or

(iii) local transport, or

(b) the payment or reimbursement of reasonable expenses incurred by such an employee on such transport or accommodation and subsistence.

(2) Subsection (1)(a)(ii) only applies if the related accommodation and subsistence is provided at reasonable cost.

(3) In this section “transfer transport” means transport by sea or air between the mainland of Great Britain or Northern Ireland and the offshore installation, which meets conditions A and B.

(4) Condition A is that the place of arrival or departure on the mainland is one to or from which transport between the mainland and the offshore installation is provided for employees generally.

(5) Condition B is that the cost of the transport would not be deductible under Part 5 if the employee incurred and paid it.

(6) In this section—

“related accommodation and subsistence” means overnight accommodation and subsistence in the vicinity of the place of departure or arrival on the mainland, which is necessary because of the time at which transfer transport is to be taken,

“local transport” means transport between a place where the employee is provided with related accommodation and subsistence and the place of departure or arrival on the mainland,

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“workplace” and “permanent workplace” have the meaning given by section 339.

Miners etc.

Miners etc: coal and allowances in lieu of coal

306

(1) No liability to income tax arises in respect of the provision of coal or smokeless fuel or an allowance paid in lieu of such provision if the employee is a colliery worker and the condition in subsection (2) is met.

(2) That condition is that the amount of coal or fuel provided or in respect of which the allowance is paid does not substantially exceed the amount reasonably required for personal use.

(3) That condition is assumed to be met unless the contrary is shown.

(4) In this section “colliery worker” means a coal miner or any other person employed at or about a colliery otherwise than in clerical, administrative or technical work.

Chapter 9 — Exemptions: pension provision

Death or retirement benefit provision

307

(1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of provision made by an employee’s employer under a registered pension scheme or otherwise for a retirement or death benefit.

(1A) Subsection (1) does not apply to provision made for insuring against the risk that a retirement or death benefit under an employer-financed retirement benefits scheme cannot be paid or given because of the employer’s insolvency.

(1B) In subsection (1A) “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 (see section 393A).

(2) In this section “retirement or death benefit” means a pension, annuity, lump sum, gratuity or other similar benefit which will be paid or given to the employee , or paid or given in respect of the employee to any other individual or to a charity, in the event of the employee’s retirement or death.

Exemption of contributions to approved personal pension arrangements

308

No liability to income tax arises in respect of earnings where an employee’s employer makes contributions under a registered pension scheme in respect of the employee.

Chapter 10 — Exemptions: termination of employment

Redundancy payments

Limited exemptions for statutory redundancy payments

309

(1) No liability to income tax in respect of earnings arises by virtue of a 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.

(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—

(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—

“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 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.

Outplacement benefits

Counselling and other outplacement services

310

(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

(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 to enable the person to do either or both of the following—

(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,

(4) Condition C is that the person has been employed ... 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

(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 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 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,

(b) that the employee incurs and pays the expenses, and

(8) In this section “mileage allowance payments” has the meaning given by section 229(2).

Retraining courses

311

(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—

(a) fees for the attendance of another person (“the employee”) at a training course,

(b) travelling expenses incurred in connection with it,

(d) the cost of any books which are essential for a person attending it.

(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,

(b) it is entirely devoted to the teaching or practical application (or both) of the skills or knowledge, and

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) The employment conditions are that—

(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,

(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 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.

(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 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

(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).

Recovery of tax

312

(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 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 condition not being met may be made under section 29(1) of TMA 1970.

(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 an officer of Revenue and Customs a notice containing particulars of the person’s failure to begin the course or continued employment or re-employment within 60 days of coming to know of it.

(5) If an officer of Revenue and Customs has reason to believe that a person has failed to give such a notice, the officer may by notice require the person to provide such information as the officer may reasonably require for the purposes of this section about—

(a) the failure to begin the course,

(b) the continued employment, or

(6) A notice under subsection (5) may specify a time (not less than 60 days) within which the required information must be provided.

Chapter 11 — Miscellaneous exemptions

Living accommodation

Repairs and alterations to living accommodation

313

(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 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 leases) where premises are let under a lease to which that section applies.

Council tax etc. paid for certain living accommodation

314

(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 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—

(a) any payment to, for or on behalf of the employee, or

(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.

Limited exemption for expenses connected with certain living accommodation

315

(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—

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 a result of security threat).

(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

(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—

$$(10%×NE×DADE)−SMG$where—DA is the number of reckonable days in the tax year (a “reckonable day” being a day on which—(a) the accommodation is provided, and(b) the employment is held by the employee),DE is—(a) the number of days in that year, or(b) if the employment is held for only part of that year, the number of days in that part,NE is the net amount of the earnings from the employment in the tax year (see subsection (5)),SMG is, where the expenses are incurred by a person other than the employee, so much of any sum made good by the employee to that other person as is properly attributable to the expenses.$

(5) To calculate the net amount of the earnings from the employment—

Step 1

Take the earnings from the employment, leaving out of account the expenses in question.

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.

Step 3

Deduct any deductions allowable under—

(a) section 232 (giving effect to mileage allowance relief) or Part 5 of this Act,

(b) sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or

Work accommodation, supplies etc.

Accommodation, supplies and services used in employment duties

316

(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 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 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 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

(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—

(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.

(6) The Treasury may make provision by regulations as to what is an excluded benefit for the purposes of subsection (4)(b).

(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

Subsidised meals

317

(1) No liability to income tax arises in respect of the provision for an employee by the employer of free or subsidised meals if they are provided—

(a) in a canteen, or

(b) on the employer’s business premises,

and conditions A to D 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—

(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—

(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.

(4A) Condition D is that the provision is not pursuant to—

(a) relevant salary sacrifice arrangements, or

(b) relevant flexible remuneration arrangements.

(5) In this section “free or subsidised meal voucher or token” means a voucher, ticket, pass or other document or token which—

(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.

(5A) In this section—

“relevant salary sacrifice arrangements” means arrangements (whenever made, whether before or after the employment began) under which the employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of free or subsidised meals;

“relevant flexible remuneration arrangements” means arrangements (whenever made, whether before or after the employment began) under which the employee and employer agree that the employee is to be provided with free or subsidised meals rather than receive some other description of employment income.

(6) In this section “meals” includes light refreshments.

Childcare

Care for children

318

(1) No liability to income tax arises in respect of the provision for an employee of care for a child if conditions A to D are met.

For the meaning of “care” and “child”, see section 318B.

(2) If those conditions are met only as respects part of the provision, no such liability arises in respect of that part.

(3) Condition A is that the child—

(a) is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense,

(b) is resident with the employee, or

For the meaning of “parental responsibility”, see section 318B.

(4) Condition B is that—

(a) the premises on which the care is provided are not used wholly or mainly as a private dwelling, and

(b) any applicable registration requirement is met.

(5) The registration requirements are—

(za) in England, that under ... Part 3 of the Childcare Act 2006;

(a) in ... Wales, that under Part 2 of the Children and Families (Wales) Measure 2010;

(b) in Scotland, that under Part 5 of the Public Services Reform (Scotland) Act 2010 ;

(6) Condition C is that—

(a) the premises on which the care is provided are made available by the scheme employer alone, or

(b) the partnership requirements are met.

In this section “scheme employer” means the employer operating the scheme under which the care is provided (who need not be the employer of the employee).

(7) The partnership requirements are—

(a) that the care is provided under arrangements made by persons who include the scheme employer,

(b) that the premises on which it is provided are made available by one or more of those persons, and

(c) that under the arrangements the scheme employer is wholly or partly responsible for financing and managing the provision of the care.

(8) Condition D is that the care is provided under a scheme that is open—

(a) to the scheme employer’s employees generally, or

(b) generally to those of the scheme employer’s employees at a particular location,

and that the employee to whom it is provided is either an employee of the scheme employer or is an employee working at the same location as employees of the scheme employer to whom the scheme is open.

Telephones and computer equipment

Mobile telephones

319

(1) No liability to income tax arises by virtue of section 62 (general definition of earnings) or Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the provision of one mobile telephone for an employee without any transfer of property in it.

(2) In this section “mobile telephone” means telephone apparatus which—

(a) is not physically connected to a land-line, and

(b) is not used only as a wireless extension to a telephone which is physically connected to a land-line,

or any thing which may be used in such apparatus for the purpose of gaining access to, or using, a public electronic communications service.

(3) In this section the reference to the provision of a mobile telephone includes a reference to the provision, together with the mobile telephone provided, of access to, or the use of, a public electronic communications service by means of one mobile telephone number.

(4) For the purposes of subsection (2) “telephone apparatus” means wireless telegraphy apparatus designed or adapted for the primary purpose of transmitting and receiving spoken messages and used in connection with a public electronic communications service.

Limited exemption for computer equipment

320

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Awards and gifts

Suggestion awards

321

(1) This section applies where an employer establishes a scheme for the making of suggestions that is open on the same terms—

(a) to employees of the employer generally, or

(b) to a particular description of them.

(2) No liability to income tax arises in respect of an encouragement award or financial benefit award made under the scheme for a suggestion which meets conditions A to C if, or to the extent that, it does not exceed the permitted maximum for the award under section 322.

(3) Condition A is that the suggestion relates to the activities carried on by the employer.

(4) Condition B is that the suggestion is made by an employee who could not reasonably be expected to make it in the course of the duties of the employment, having regard to the employee’s experience.

(5) Condition C is that the suggestion is not made at a meeting held for the purpose of proposing suggestions.

(6) In this section and section 322—

“encouragement award” means an award, other than a financial benefit award, made for a suggestion with intrinsic merit or showing special effort, and

“financial benefit award” means an award for a suggestion relating to an improvement in efficiency or effectiveness which the employer has decided to adopt and reasonably expects will result in a financial benefit.

Suggestion awards: “the permitted maximum”

322

(1) The permitted maximum for an encouragement award for the purposes of section 321 (suggestion awards) is £25.

(2) The permitted maximum for a financial benefit award where no such award for the suggestion has been made before is—

(a) if only one such award is made for the suggestion, the suggestion maximum, and

(b) if two or more such awards are made on the same occasion to different persons for the suggestion, the appropriate proportion of the suggestion maximum.

(3) If on a later occasion or occasions one or more further such awards are made for the same suggestion, the permitted maximum for each is—

(a) if only one such award is made for the suggestion on that occasion, the residue of the suggestion maximum, and

(b) if two or more such awards are made on the same occasion to different persons for the suggestion, the appropriate proportion of that residue.

(4) The suggestion maximum for a financial benefit award is the financial benefit share or £5000 if that is less.

(5) In subsection (4) “the financial benefit share” means the greater of—

(a) half the financial benefit reasonably expected to result from the adoption of the suggestion for the first year after its adoption, and

(b) one-tenth of the financial benefit reasonably expected to result from its adoption for the first 5 years after its adoption.

(6) In this section—

“the appropriate proportion” means such proportion as the award bears to the total of the financial benefit awards made on the same occasion for the suggestion,

“the residue of the suggestion maximum” means the suggestion maximum less the total previous exemption, and

“the total previous exemption” means the total of the amounts exempted from income tax under section 321 in respect of financial benefit awards for the suggestion made on previous occasions.

Long service awards

323

(1) No liability to income tax arises in respect of a long service award which meets the condition in subsection (3) if or to the extent that the chargeable amount does not exceed the permitted maximum.

(2) In subsection (1)—

“chargeable amount” means the amount of employment income which would be charged to tax in respect of the award apart from subsection (1),

“long service award” means an award made to an employee to mark not less than 20 years' service with the same employer, and

“permitted maximum” means £50 for each year of service in respect of which the award is made.

(3) The condition is that the award must take the form of—

(a) tangible moveable property,

(b) shares in a company which is, or belongs to the same group as, the employer, or

(i) a payment,

(ii) a cash voucher,

(iii) a credit-token,

(iv) securities,

(v) shares not within paragraph (b), or

(vi) an interest in or rights over securities or shares.

(4) Subsection (1) does not apply to an award (“the later award”) if another award to mark a particular period of service with the same employer has been made to the employee in the period of 10 years ending with the date on which the later award is made.

(5) For the purposes of this section, service is treated as being with the same employer if it is with two or more employers—

(a) each of whom is a successor or predecessor of the others, or

(b) one of whom is a company which belongs or has belonged to the same group as the others or a predecessor or successor of the others.

(6) In this section “group” means a body corporate and its 51% subsidiaries.

Small gifts from third parties

324

(1) No liability to income tax arises in respect of a gift provided for an employee or a member of the employee’s family or household if conditions A to E are met.

(2) Condition A is that the gift is not provided by the employer or a person connected with the employer.

(3) Condition B is that neither the employer nor a person connected with the employer has directly or indirectly procured the gift.

(4) Condition C is that the gift is not made in recognition of particular services performed by the employee in the course of the employment or in anticipation of such services.

(5) Condition D is that the gift is not cash or securities or the use of a service.

(6) Condition E is that the total cost to the donor of all the eligible gifts in respect of the employee in question during the tax year does not exceed £250.

(7) For the purposes of condition E, the total cost to the donor includes any value added tax payable on the supply of the gifts to the donor, whether or not the donor is entitled to a credit or repayment in respect of that tax.

(8) In this section “eligible gifts” means all gifts which—

(a) meet conditions A to D, or

(b) are non-cash vouchers or credit-tokens and meet—

(i) conditions A to C, and

(ii) conditions A and B in section 270 (exemption for small gifts of vouchers and tokens from third parties).

(9) Subsection (1) does not apply to non-cash vouchers and credit-tokens (but see section 270 which makes provision for a corresponding exemption for them).

Overseas medical treatment

325

(1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of—

(a) providing an employee with medical treatment outside the United Kingdom where the need for it arises while the employee is outside the United Kingdom for the purpose of performing the duties of the employment, or

(b) providing an employee with insurance against the cost of providing such treatment.

(2) For the purposes of this section—

(a) “medical treatment” includes all procedures for diagnosing or treating any physical or mental illness, infirmity or defect, and

(b) providing a person with medical treatment includes providing for the person to be an in-patient so that such treatment can be given.

Expenses incidental to sale etc. of asset

Expenses incidental to transfer of a kind not normally met by transferor

326

(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 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

(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

Chapter 1 — Deductions allowed from earnings: general rules

Introduction

Deductions from earnings: general

327

(1) This Part provides for deductions that are allowed from the taxable earnings 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

(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),

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),

... 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), and

sections 188 to 194 of FA 2004 (contributions to registered pension schemes).

General rules

The income from which deductions may be made

328

(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.

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 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

(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),

sections 370 to 374 (travel deductions from earnings charged on receipt),

Deductions from earnings not to exceed earnings

329

(1) The amount of a deduction allowed under this Part may not exceed the earnings from which it is deductible.

(1A) If the earnings from which a deduction allowed under this Part is deductible include earnings that are “excluded” within the meaning of section 15(1A)—

(a) the amount of the deduction allowed is a proportion of the amount that would be allowed under this Part if the tax year were not a split year, and

(b) that proportion is equal to the proportion that the part of the earnings that is not “excluded” bears to the total earnings.

(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 (or, in a case within subsection (1A), the part of those earnings that is not “excluded”) .

(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 (or, in a case within subsection (1A), the part of the earnings that is not “excluded”) remaining after the other deductions.

(4) Subsections (1) and (2) do not apply to a deduction under section 351 (expenses 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 128 of ITA 2007 (which provides that where a loss in an employment is sustained, relief may be given against other income).

Prevention of double deductions

330

(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 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.

Order for making deductions

331

(1) This Part needs to be read with section 25(1) to (3) of ITA 2007 (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—

(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)).

Meaning of “the deductibility provisions”

332

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 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 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),

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),

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 — Deductions for employee’s expenses

Introduction

Scope of this Chapter: expenses paid by the employee

333

(1) A deduction from a person’s earnings for an amount is allowed under the following provisions of this Chapter only if the amount—

(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 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 qualifying new resident 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 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.

Effect of reimbursement etc.

334

(1) For the purposes of this Chapter, a person may be regarded as paying an 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 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 provisions.

Application of deductions provisions: “earnings charged on receipt” and “earnings charged on remittance”

335

(1) The availability of certain deductions under this Chapter depends on whether the earnings are earnings charged on receipt or earnings charged on 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 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

(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... or 27, and

“earnings charged on remittance” means earnings which are taxable earnings under section 22 or 26.

General rule for deduction of employee’s expenses

Deductions for expenses: the general rule

336

(1) The general rule is that a deduction from earnings is allowed for an amount 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.

(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).

Travel expenses

Travel in performance of duties

337

(1) A deduction from earnings is allowed for travel expenses if—

(a) the employee is obliged to incur and pay them as holder of the employment, and

(b) the expenses are necessarily incurred on travelling in the performance of the duties of the employment.

(2) This section needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).

Travel for necessary attendance

338

(1) A deduction from earnings is allowed for travel expenses if—

(a) the employee is obliged to incur and pay them as holder of the employment, and

(b) the expenses are attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment.

(2) Subsection (1) does not apply to the expenses of ordinary commuting or travel between any two places that is for practical purposes substantially ordinary commuting.

(3) In this section “ordinary commuting” means travel between—

(a) the employee’s home and a permanent workplace, or

(b) a place that is not a workplace and a permanent workplace.

(4) Subsection (1) does not apply to the expenses of private travel or travel between any two places that is for practical purposes substantially private travel.

(5) In subsection (4) “private travel” means travel between—

(a) the employee’s home and a place that is not a workplace, or

(b) two places neither of which is a workplace.

(6) This section needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).

Meaning of “workplace” and “permanent workplace”

339

(1) In this Part “workplace”, in relation to an employment, means a place at which the employee’s attendance is necessary in the performance of the duties of the employment.

(2) In this Part “permanent workplace”, in relation to an employment, means a place which—

(a) the employee regularly attends in the performance of the duties of the employment, and

(b) is not a temporary workplace.

This is subject to subsections (4) and (8).

(3) In subsection (2) “temporary workplace”, in relation to an employment, means a place which the employee attends in the performance of the duties of the employment—

(a) for the purpose of performing a task of limited duration, or

(b) for some other temporary purpose.

This is subject to subsections (4) and (5).

(4) A place which the employee regularly attends in the performance of the duties of the employment is treated as a permanent workplace and not a temporary workplace if—

(a) it forms the base from which those duties are performed, or

(b) the tasks to be carried out in the performance of those duties are allocated there.

(5) A place is not regarded as a temporary workplace if the employee’s attendance is—

(a) in the course of a period of continuous work at that place—

(i) lasting more than 24 months, or

(ii) comprising all or almost all of the period for which the employee is likely to hold the employment, or

(b) at a time when it is reasonable to assume that it will be in the course of such a period.

(6) For the purposes of subsection (5), a period is a period of continuous work at a place if over the period the duties of the employment are performed to a significant extent at the place.

(7) An actual or contemplated modification of the place at which duties are performed is to be disregarded for the purposes of subsections (5) and (6) if it does not, or would not, have any substantial effect on the employee’s journey, or expenses of travelling, to and from the place where they are performed.

(8) An employee is treated as having a permanent workplace consisting of an area if—

(a) the duties of the employment are defined by reference to an area (whether or not they also require attendance at places outside it),

(b) in the performance of those duties the employee attends different places within the area,

(d) the area would be a permanent workplace if subsections (2), (3), (5), (6) and (7) referred to the area where they refer to a place.

Travel between group employments

340

(1) A deduction from earnings from an employment is allowed for travel expenses if conditions A to D are met.

(2) Condition A is that the employee is obliged to incur and pay the expenses.

(3) Condition B is that the travel is for the purpose of performing duties of the employment at the destination.

(4) Condition C is that the employee has performed duties of another employment at the place of departure.

(5) Condition D is that the employments are with companies in the same group.

(6) In this section “group” means a company and its 51% subsidiaries.

(7) For the purposes of sections 353 and 354 (special rules for earnings with a foreign element), the expenses are treated as incurred in the performance of the duties to be performed at the destination.

(8) This section needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).

Travel at start or finish of overseas employment

341

(1) A deduction from earnings from an employment is allowed for starting travel expenses and finishing travel expenses if conditions A to C are met.

(2) Condition A is that the duties of the employment are performed wholly outside the United Kingdom.

(3) Condition B is that the employee is UK resident.

(4) Condition C is that in a case where the employer is a foreign employer, the employee is not a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).

(5) If the travel is only partly attributable to the taking up or termination of the employment, this section applies only to the part of the expenses properly so attributable.

(6) Subsection (7) applies if in the tax year the employment is in substance one whose duties fall to be performed outside the United Kingdom.

(7) Duties of the employment performed in the United Kingdom, whose performance is merely incidental to the performance of duties outside the United Kingdom, are to be treated for the purposes of subsection (2) as performed outside the United Kingdom.

(8) In this section—

“starting travel expenses” means expenses incurred by the employee in travelling from a place in the United Kingdom to take up the employment,

“finishing travel expenses” means expenses incurred by the employee in travelling to a place in the United Kingdom on the termination of the employment, and

“employee” includes a person who is to be, or has ceased to be, an employee.

(9) This section needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).

Travel between employments where duties performed abroad

342

(1) A deduction from earnings from an employment is allowed for travel expenses incurred by the employee if conditions A to F are met.

(2) Condition A is that the travel is for the purpose of performing duties of the employment at the destination.

(3) Condition B is that the employee has performed duties of another employment at the place of departure.

(4) Condition C is that the place of departure or the destination or both are outside the United Kingdom.

(5) Condition D is that the duties of one or both of the employments are performed wholly or partly outside the United Kingdom.

(6) Condition E is that the employee is UK resident.

(7) Condition F is that in a case where the employer is a foreign employer, the employee is not a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).

(8) If the travel is only partly attributable to the purpose of performing duties of the employment at the destination, this section applies only to the part of the expenses properly so attributable.

(9) This section needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).

Fees and subscriptions

Deduction for professional membership fees

343

(1) A deduction from earnings from an employment is allowed for an amount paid in respect of a professional fee if—

(a) the duties of the employment involve the practice of the profession to which the fee relates, and

(b) the registration, certification, licensing or other matter in respect of which the fee is payable is a condition, or one of alternative conditions, which must be met if that profession is to be practised in the performance of those duties.

(2) In this section “professional fee” means a fee mentioned in the following Table.

Table

Health professionals1Fee payable for entry or retention of a name in any of the following—a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .bthe register maintained by the Registrar of Chiropractors,c the dental care professionals register, dthe dentists register,ethe register of dispensing opticians,fthe register maintained by the Health and Care Professions Council ,g. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .hthe register of medical practitioners,ithe register maintained by the Nursing and Midwifery Council,jeither of the registers of opthalmic opticians,kthe register maintained by the Registrar of Osteopaths,l the register maintained under article 19 of the Pharmacy Order 2010 so far as relating to pharmacists or pharmacy technicians, nthe register of pharmaceutical chemists kept under Articles 6 and 9 of the Pharmacy (Northern Ireland) Order 1976.o. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .pthe register maintained by the Care Council for Wales,qthe register maintained by the Scottish Social Services Council,rthe register maintained by the Northern Ireland Social Care Council, sthe register of social workers in England kept under section 39(1) of the Children and Social Work Act 2017, tthe register kept under the Anaesthesia Associates and Physician Associates Order 2024. 1A Trainee registration fee payable by a specialty registrar to a body which recommends specialty registrars to the registrar of the General Medical Council for the award of a certificate of completion of training under section 34L of the Medical Act 1983. 1B Trainee registration fee payable by a person listed in the dentists register to a body which provides evidence to the General Dental Council relating to a person’s suitability to be awarded a Certificate of Completion of Specialist Training in a specialist branch of dentistry pursuant to regulations made under section 26(3) and (4) of the Dentists Act 19842. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Fee payable for entry or retention of a name in any of the following—athe register maintained by the registrar appointed by the Farriers Registration Council,bthe supplementary veterinary register,cthe register of veterinary surgeons.ca any list or register of veterinary nurses maintained by the Royal College of Veterinary Surgeons, dthe register maintained by the Animal Medicines Training Regulatory Authority pursuant to paragraph 13 of Schedule 3 to the Veterinary Medicines Regulations 2006.

Legal professionals4Fee payable to the Council for Licensed Conveyancers on the issue of a licence to practise as a licensed conveyancer.5Fee and contribution to the compensation fund or Guarantee Fund payable on the issue of a solicitor’s practising certificate.5A Fee payable to the Costs Lawyer Standards Board on applying for a costs lawyer practising certificate.

Architects6Fee payable for entry or retention of a name in the Register of Architects.

Teachers etc7Fee payable for entry or retention of a name in any of the following—a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .bthe register maintained by the General Teaching Council for Scotland,cthe register maintained by the Education Workforce Council.dthe register maintained by the General Teaching Council for Northern Ireland.

Patent attorneys and trade mark attorneys8Registration fee payable by—aa registered patent attorney,ba registered trade mark attorney.9Practising fee payable by—aa registered patent attorney,ba registered trade mark attorney.

Occupations in the transport sector10Fee payable by a driving instructor for entry or retention of a name in the register of approved instructors or on the issue or renewal of a licence authorising its holder to give paid instruction in the driving of a motor car.11Fee (including any related medical or technical examination fee) payable, on the issue or renewal of a licence by the Civil Aviation Authority, by—aan aircraft maintenance engineer,ban air traffic controller or student air traffic controller,ca member of the flight crew of an aircraft registered in the United Kingdom,da flight information service officer.12Fee (including any related medical examination fee) payable—aon the issue or renewal of a licence authorising its holder to drive a large goods vehicle or a passenger-carrying vehicle,bby an officer or other seaman on the issue, renewal or endorsement of a certificate, licence or other document which is required as evidence of his qualification or competence to serve in a ship.13Fee payable by a seafarer employed in a sea-going United Kingdom ship on the issue or renewal of a medical fitness certificate.14Fee payable by a person employed or to be employed at a United Kingdom airport for a criminal records check required for the issue of a security pass authorising him to enter areas within the airport.

Occupations in the private security industry15Fee payable on applying for a licence from the Security Industry Authority under the Private Security Industry Act 2001.

Occupations in the gambling industry16Fee payable—aon applying for a personal licence from the Gambling Commission under the Gambling Act 2005, orbon applying to vary such a licence.17Any fee payable to the Gambling Commission under section 132 of that Act.

(3) The Board of Inland Revenue may make an order adding such fee as is specified in the order to the Table of fees mentioned in subsection (2).

(4) The Commissioners may make an order if they consider that such fee is payable in respect of any registration, certification, licensing or other matter if it is required as a condition, or one of alternative conditions, of the practice of a profession.

Deduction for annual subscriptions

344

(1) A deduction from earnings from an employment is allowed for an amount paid in respect of an annual subscription if—

(a) it is paid to a body of persons approved under this section, and

(b) the activities of the body which are directed to one or more of the objects within subsection (2) are of direct benefit to, or concern the profession practised in, the performance of the duties of the employment.

(2) The objects are—

(a) the advancement or dissemination of knowledge (whether generally or among persons belonging to the same or similar professions or occupying the same or similar positions),

(b) the maintenance or improvement of standards of conduct and competence among the members of a profession,

(c) the provision of indemnity or protection to members of a profession against claims in respect of liabilities incurred by them in the exercise of their profession.

(3) An officer of Revenue and Customs may approve a body of persons under this section if, on an application by the body, the officer is satisfied that—

(a) the body is not of a mainly local character,

(b) its activities are carried on otherwise than for profit, and

(4) An officer of Revenue and Customs must give notice to the body of their decision on the application.

(5) If the activities of the body are to a significant extent directed to objects other than objects within subsection (2), an officer of Revenue and Customs may—

(a) determine the proportion of the activities directed to objects within subsection (2), and

(b) determine that only such corresponding part of the subscription as is specified by an officer of Revenue and Customs is allowable under this section.

(6) In determining that part, an officer of Revenue and Customs must have regard to the proportion of expenditure of the body attributable to objects other than objects within subsection (2) and all other relevant circumstances.

(7) If a body applies for approval under this section and is approved, a subscription paid to it—

(a) before it has applied but in the same tax year as the application, or

(b) after it has applied but before it is approved,

is treated for the purposes of this section as having been paid to an approved body.

Decisions of the Inland Revenue under section 344

345

(1) An officer of Revenue and Customs may by notice to the body in question—

(a) withdraw an approval given under section 344, and

(b) withdraw or vary a determination made under that section,

to take account of any change in circumstances.

(2) A body aggrieved by a decision of an officer of Revenue and Customs under section 344 or subsection (1) may appeal ....

(3) The notice of appeal must be given to an officer of Revenue and Customs within 30 days after the date on which notice of their decision was given to the body.

Employee liabilities and indemnity insurance

Deduction for employee liabilities

346

(1) A deduction from earnings from an employment is allowed for any or all of the following—

A. Payment in or towards the discharge of a liability related to the employment.

B. Payment of any costs or expenses incurred in connection with—

(a) a claim that the employee is subject to a liability related to the employment, or

(b) proceedings relating to or arising out of a claim that the employee is subject to a liability related to the employment.

BA. Payment of any costs or expenses not falling within paragraph B which are incurred in connection with the employee giving evidence about matters related to the employment in, or for the purposes of—

(a) a proceeding or other process (whether or not involving the employee), or

(b) an investigation (whether or not likely to lead to any proceeding or other process involving the employee).

BB. Payment of any costs or expenses not falling within paragraph B or BA which are incurred in connection with a proceeding or other process, or an investigation, in which—

(a) acts of the employee related to the employment, or

(b) any other matters related to the employment,

are being or are likely to be considered.

C. Payment of a premium under a qualifying insurance contract, but only to the extent that the premium relates to—

(a) provision in the contract for the employee to be indemnified against a payment falling within paragraph A, or

(b) provision in the contract for the payment of any costs or expenses falling within paragraph B , BA or BB .

(2) But a deduction is not allowed for a payment which falls within paragraph A B, BA or BB if it would be unlawful for the employer to enter into a contract of insurance in respect of the liability, or costs or expenses, in question.

(2A) Nor is a deduction allowed for a payment which falls within any of paragraphs A to C if the payment is made in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax.

(3) In this Chapter—

(a) “premium”, in relation to a qualifying insurance contract, means an amount payable to the insurer under the contract, and

(b) where a qualifying insurance contract relates to more than one person, employment or risk, the part of the premium to be treated as relating to each of them is to be determined by apportionment on a just and reasonable basis.

(4) In this section and section 349—

(a) “acts” includes failures to act and acts are “related to the employment” if the employee was acting—

(i) in the employee's capacity as holder of the employment, or

(ii) in any other capacity in which the employee was acting in the performance of the duties of the employment,

(b) “giving evidence” includes making a formal or informal statement or answering questions,

(c) “proceeding or other process” includes any civil, criminal or arbitration proceedings, any disciplinary or regulatory proceedings of any kind and any process operated for resolving disputes or adjudicating on complaints, and

(d) references to a proceeding or other process or an investigation include a reference to a proceeding or other process or an investigation that is likely to take place.

Payments made after leaving the employment

347

(1) A deduction for a payment is not allowed under section 346 if—

(a) the employee has ceased to hold the employment, and

(b) the payment is made after the day on which the employee ceased to hold the employment.

(2) If subsection (1) applies, see section 555 (former employee entitled to deduction in calculating net income).

348

For the purposes of this Chapter each of the following kinds of liability is related to the employment— A. Liability imposed upon the employee because he did an act, or failed to do an act—

(a) in his capacity as holder of the employment, or

(b) in any other capacity in which he acted in the performance of the duties of the employment.

Meaning of “qualifying insurance contract”

349

(1) In section 346 “qualifying insurance contract” means a contract of insurance which meets conditions A, B, C and D.

(2) Condition A is that, so far as the risks insured against are concerned, the contract only relates to one or more of the following—

(a) the indemnification of an employee against a liability related to the employment,

(b) the indemnification of a person against vicarious liability in respect of a liability related to another person’s employment,

(i) in connection with a claim that a person is subject to a liability to which the insurance relates, or

(ii) in connection with any proceedings relating to or arising out of a claim that a person is subject to a liability to which the insurance relates,

(ca) the payment of costs or expenses incurred in connection with an employee giving evidence about matters related to the employee's employment in, or for the purposes of—

(i) a proceeding or other process (whether or not involving the employee), or

(ii) an investigation (whether or not likely to lead to any proceeding or other process involving the employee),

(cb) the payment of any costs or expenses incurred in connection with a proceeding or other process, or an investigation, in which—

(i) acts of an employee related to the employment, or

(ii) any other matters related to the employment of an employee,

are being or are likely to be considered,

(d) the indemnification of an employer against loss from a payment made by the employer to an employee in respect of—

(i) a liability related to the employment, or

(ii) any costs or expenses incurred as mentioned in paragraph (c) , (ca) or (cb).

(3) Condition B is that—

(a) the period of insurance under the contract does not exceed 2 years or, if it does, it does so only because of one or more renewals, each for a period of 2 years or less, and

(b) the insured is not required to renew the contract for any period.

(4) Condition C is—

(a) that the insured is not entitled under the contract to receive any payment or other benefit in addition to—

(i) cover for the risks insured against, and

(ii) any right to renew the contract, or

(b) if the insured is so entitled, that the part of the premium reasonably attributable to the entitlement is not a significant part of the whole premium.

(5) Condition D is that the contract is not connected with another contract.

Connected contracts

350

(1) An insurance contract is connected with another contract for the purposes of section 349 if conditions E and F are met—

(a) at the time when both contracts are first in force, or

(b) at any time after that time.

(2) Condition E is that one of the contracts was entered into—

(a) by reference to the other, or

(b) with a view to enabling or facilitating entry into the other on particular terms.

(3) Condition F is that the terms on which one of the contracts was entered into are significantly different from what they would have been if—

(a) it had not been entered into in anticipation of the other being entered into, or

(b) the other had not also been entered into.

(4) If—

(a) there is only one such significant difference in terms, and

(b) the contracts meet conditions A, B and C specified in section 349,

the difference may be disregarded in the following cases.

(5) The first case is where the difference is a reduction in premiums under the contract that is reasonably attributable only to the contract—

(a) containing a right to renew, or

(b) being entered into by way of renewal.

(6) The second case is where—

(a) two or more contracts have been entered into as part of a single transaction, and

(b) the difference is reductions in their premiums that are reasonably attributable only to the premium under each of them having been fixed by reference to the appropriate proportion of the combined premium.

(7) In subsection (6) “the combined premium” means the amount that would have been the total premium under a single contract relating to all the risks covered by the contracts.

Expenses of ministers of religion

351

(1) A deduction is allowed from any earnings from any employment as a minister of a religious denomination for amounts incurred by the minister wholly, exclusively and necessarily in the performance of duties of such an employment.

(2) If a minister of a religious denomination pays rent in respect of a dwelling-house, part of which is used mainly and substantially for the purposes of such duties, a deduction is allowed from the minister’s earnings from any employment as such a minister for—

(a) one quarter of the rent, or

(b) if less, the part of the rent that, on a just and reasonable apportionment, is attributable to that part of the dwelling-house.

(3) If—

(a) an interest in premises belongs to a charity or an ecclesiastical corporation, and

(b) because of that interest and by reason of holding an employment as a minister of a religious denomination, the minister has a residence in the premises from which to perform the duties of the employment,

a deduction is allowed from the minister’s earnings from any such employment for part of any expenses borne by the minister on the maintenance, repair, insurance or management of the premises.

(4) The amount of the deduction is—

$$A4-B$where—A is the amount of the expenses borne by the minister on the maintenance, repair, insurance or management of the premises, andB is the amount of those expenses that are allowed under subsection (1).$

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Subsection (1) needs to be read with section 359 (disallowance of travel expenses: mileage allowances and reliefs).

Agency fees paid by entertainers

Limited deduction for agency fees paid by entertainers

352

(1) A deduction is allowed from earnings from an employment as an entertainer for agency fees (and any value added tax on them) if the fees are calculated as a percentage of the whole or part of the earnings from the employment.

This is subject to the limit in subsection (2).

(2) Amounts may be deducted under this section in calculating the net taxable earnings from an employment in a tax year only to the extent that, in aggregate, they do not exceed 17.5% of the taxable earnings from the employment in the tax year.

(3) Subsections (4) and (5) apply for the purposes of this section.

(4) “Entertainer” means an actor, dancer, musician, singer or theatrical artist.

(5) “Agency fees”, in relation to an employment, means—

(a) fees paid under a contract between the employee and another person, to whom the fees are paid, who—

(i) agrees under the contract to act as an agent of the employee in connection with the employment, and

(ii) at the time the fees are paid is carrying on an employment agency with a view to profit, and

(b) fees paid under an arrangement under which a co-operative society or the members of such a society agree to act as the employee’s agent in connection with the employment.

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