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Income Tax (Earnings and Pensions) Bill


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

    185

 

Fixed sum deductions

 367   Fixed sum deductions for repairing and maintaining work equipment

     (1)    A deduction is allowed for the sum, if any, fixed by the Treasury as in their

opinion representing the average annual expenses incurred by employees of

the class to which the employee belongs in respect of the repair and

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maintenance of work equipment.

     (2)    The Treasury may only fix such a sum for a class of employees if they are

satisfied that—

           (a)           the employees are generally responsible for the whole or part of the

expense of repairing and maintaining the work equipment, and

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           (b)           the expenses for which they are generally responsible would be

deductible from the employees’ earnings under section 336 if paid by

them.

     (3)    No deduction is allowed under this section if the employer pays or reimburses

the expenses in respect of which the sum is fixed or would do so if requested.

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     (4)    If the employer pays or reimburses part of those expenses or would do so if

requested, the amount of the deduction is reduced by the amount which is or

would be paid or reimbursed.

     (5)    In this section “work equipment” means tools or special clothing.

     (6)    This section needs to be read with section 330(2) (prevention of double

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deductions).

 368   Fixed sum deductions from earnings payable out of public revenue

     (1)    A deduction is allowed from earnings payable out of the public revenue for the

employee’s fixed sum expenses in respect of the duties to which the earnings

relate.

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     (2)    “Fixed sum expenses” means the sum, if any, fixed by the Treasury as in their

opinion representing the average annual expenses which employees of the

employee’s description are obliged to pay wholly, exclusively and necessarily

in the performance of duties to which such earnings relate.

     (3)    This section needs to be read with section 330(2) (prevention of double

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deductions).

Chapter 5

Deductions for earnings representing benefits or reimbursed expenses

Introduction

 369   Scope of this Chapter: earnings representing benefits or reimbursed expenses

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     (1)    A deduction from a person’s earnings for an amount is allowed under the

following provisions of this Chapter where the amount is included in the

earnings in respect of—

           (a)           provision made for the person, or

 

 

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

    186

 

           (b)           expenses reimbursed by another person.

     (2)    In this Chapter references to “the included amount” are references to the

amount so included.

     (3)    If the included amount is an amount treated as earnings under—

           (a)           Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens),

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           (b)           Chapter 5 of Part 3 (taxable benefits: living accommodation), or

           (c)           Chapter 10 of Part 3 (taxable benefits: residual liability to charge),

            a deduction may be allowed instead in respect of the benefit in question under

Chapter 3 of this Part (deductions from benefits code earnings).

Travel costs and expenses where duties performed abroad

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 370   Travel costs and expenses where duties performed abroad: employee’s travel

     (1)    A deduction is allowed from earnings which are taxable earnings under

section 15 or 21 (earnings for year when employee resident and ordinarily

resident in UK) if—

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

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

employee, or

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

such a journey, and

           (b)           the circumstances fall within Case A, B or C.

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     (2)    The deduction is equal to the included amount.

     (3)    Case A is where—

           (a)           the employee is absent from the United Kingdom wholly and

exclusively for the purpose of performing the duties of one or more

employments,

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           (b)           the duties concerned can only be performed outside the United

Kingdom, and

           (c)           the journey is—

                  (i)                 a journey from a place outside the United Kingdom where such

duties are performed to a place in the United Kingdom, or

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                  (ii)                a return journey following such a journey.

     (4)    Case B is where—

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

Kingdom,

           (b)           those duties are not performed on a vessel,

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           (c)           the journey is between a place in the United Kingdom and a place

outside the United Kingdom where duties of the employment are

performed,

           (d)           the duties performed outside the United Kingdom can only be

performed there, and

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           (e)           the journey is made wholly and exclusively for the purpose of

performing them or returning after performing them.

     (5)    Case C is where—

 

 

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

    187

 

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

Kingdom,

           (b)           those duties are performed on a vessel,

           (c)           the journey is between a place in the United Kingdom and a place

outside the United Kingdom where duties of the employment are

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performed,

           (d)           the duties performed outside the United Kingdom can only be

performed there, and

           (e)           the journey is made wholly and exclusively for the purpose of

performing those duties, or those duties and other duties of the

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employment, or returning after performing them.

 371   Travel costs and expenses where duties performed abroad: visiting spouse’s

or child’s travel

     (1)    A deduction is allowed from earnings which are taxable earnings under

section 15 or 21 (earnings for year when employee resident and ordinarily

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resident in UK) if—

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

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

employee’s spouse or child, or

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

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such a journey, and

           (b)           conditions A to C are met.

     (2)    The deduction is equal to the included amount.

     (3)    Condition A is that the employee is absent from the United Kingdom for a

continuous period of at least 60 days for the purpose of performing the duties

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of one or more employments.

     (4)    Condition B is that the journey is between a place in the United Kingdom and

a place outside the United Kingdom where such duties are performed.

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

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

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           (b)           visiting the employee during that period, or

           (c)           returning to a place in the United Kingdom after so accompanying or

visiting the employee.

     (6)    A deduction is not allowed under this section for more than two outward and

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

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

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

 372   Where seafarers’ duties are performed

For the purposes of—

           (a)           section 370 (employee’s travel costs and expenses where duties

40

performed abroad), and

           (b)           section 371 (visiting spouse’s or child’s travel costs and expenses where

duties performed abroad),

 

 

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

    188

 

            whether duties performed on a vessel are performed in or outside the United

Kingdom is determined without regard to section 40(2) (certain duties treated

as performed in UK).

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

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

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in UK

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

United Kingdom—

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

United Kingdom, and

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

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

employee, or

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

such a journey.

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

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

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

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

employee (see section 375).

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

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

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

duties of the employment, or

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

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to that country after performing such duties.

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

is equal to the included amount.

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

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

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

where duties performed in UK

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

United Kingdom—

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

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United Kingdom, and

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

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

employee’s spouse or child, or

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

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such a journey.

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

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

 

 

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

    189

 

     (3)    Condition A is that the journey—

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

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

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

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

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

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

more employments from which the employee receives earnings for duties

performed in the United Kingdom.

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

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

           (b)           visiting the employee during that period, or

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

employee normally lives, after so accompanying or visiting the

employee.

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

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

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

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

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

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

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

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

 375   Meaning of “qualifying arrival date”

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

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in relation to a person if—

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

perform duties of an employment from which the person receives

earnings for duties performed in the United Kingdom, and

           (b)           condition A or B is met.

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

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

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

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

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

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

employment from which the person receives earnings for duties performed in

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

Foreign accommodation and subsistence costs and expenses

 376   Foreign accommodation and subsistence costs and expenses (overseas

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employments)

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

 

 

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

    190

 

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

Kingdom,

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

Kingdom,

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

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domiciled in the United Kingdom, and

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

                  (i)                 the provision of accommodation or subsistence outside the

United Kingdom for the employee for the purpose of enabling

the employee to perform the duties of the employment, or

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

such accommodation or subsistence for that purpose.

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

is equal to the included amount.

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

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

attributable to that purpose.

     (4)    Subsection (5) applies if in the tax year the employment is in substance one

whose duties fall to be performed outside the United Kingdom.

     (5)    Duties of the employment performed in the United Kingdom, whose

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performance is merely incidental to the performance of duties outside the

United Kingdom, are to be treated for the purposes of subsection (1)(a) as

performed outside the United Kingdom.

Personal security assets and services

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

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     (1)    This section applies if—

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

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

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

used by the employee to meet the threat,

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

                  (i)                 the provision or use, or

                  (ii)                expenses connected with it,

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

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

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another person (“the provider”), and

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

reimbursing the expenses is meeting the threat.

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

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

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included amount is allowed.

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

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

 

 

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

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

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

attributable to the intended use for that purpose is allowed.

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

not matter if—

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

           (b)           the employee is or becomes entitled—

                  (i)                 to the property in the asset, or

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

concerned.

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

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

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

allowed.

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

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

employee, does not prevent a deduction being allowed.

     (8)    In this section—

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

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

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

dwelling.

Chapter 6

Deductions from seafarers’ earnings

 378   Deduction from seafarers’ earnings: eligibility

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

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

year when employee resident and ordinarily resident in UK),

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

the United Kingdom, and

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

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

which is either—

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

           (b)           a combined period.

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     (3)    A combined period is a period—

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

Kingdom, and

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

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

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Kingdom or a period which is itself a combined period,

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

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

Kingdom.

 

 

 
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Revised 17 February 2003