TCM0118040 - Eligibility - income (employed and self-employed): Allowable deductions from income (Info)

Allowable deductions from employment income are

• fees and subscriptions to professional bodies and learned societies deductible under s343 or s344 ITEPA 2003 or for year 2001-2002, deductible under s201 ICTA 1988.
  This is income tax deduction. For more information, use Schedule E Manual paras SE32890 and SE32895 or the Employment Income Manual paras EIM32890 and EIM32900.
• employee liabilities and indemnity insurance premiums deductible under s346 - s347 ITEPA 2003 or, for year 2001-2002, deductible under s201AA ICTA 1988.
  This is income tax deduction. For more information, use the Employment Income Manual para EIM30505.
• entertainers’ expenses deductible under s352 ITEPA 2003 or, for year 2001-2002, deductible under s201A ICTA 1988.
  This is income tax deduction. For more information, use the Employment Income Manual para EIM62800.
• earnings withheld by an employer under an approved payroll deduction scheme for payments to charity under s713 ITEPA 2003 or, for year 2001-2002 under s202(2) ICTA 1988.
  This is income tax deduction.
• from year 2003-2004 onwards, deduction in respect of expenses that are ‘wholly, exclusively and necessarily incurred’ in the performance of the duties of the customer’s employment permitted under s336 ITEPA 2003.
  This is income tax deduction. For more information, use the links from the Employment Income Manual para EIM31630.
  Note: Although this deduction isn’t allowed for the year 2001-2002, where these expenses were paid or reimbursed by the employer, the amount of the payment or reimbursement was disregarded as income for the year. In practice, the only difference between the effect of the rules for the two periods is that income won’t be reduced by the amount of unreimbursed expenses in the year 2001-2002, but will be for the year 2003-2004 onwards.
• From the year 2003-2004 onwards, deduction for travel expenses falling within s337 - s342, s370, s371, s373 and s374 ITEPA 2003.
  The following travel costs may be deducted
  • For employees resident and ordinarily resident in the UK
    • travel costs for the employee - for journeys that they have to make in the performance of the duties of their employment (s337) - to or from a place they have to attend in the performance of their duties, but not journeys that are ordinary commuting or private travel (s338) - for journeys that they have to make between employments they have with two or more companies of the same group (s340) - at the start or finish of an employment performed wholly overseas (s341) - between employments with duties performed wholly or partly overseas (s342) - between UK and overseas place of work (s370)
      For more information, use the Employment Income Manual paras EIM34025, EIM34040 and EIM34090.
    • travel costs of the employee’s visiting spouse or child between UK and overseas place of work (s371)
      For more information, use the Note below and the Employment Income Manual para EIM34050.
  • For employees working, but not ordinarily resident, in UK
    • travel costs of the employee between UK and their overseas home (s373)
      For more information, use the Employment Income Manual para EIM35030
      and
    • travel costs of the employee’s visiting spouse or child between their overseas home and UK (s374)
      For more information, use the Note below and the Employment Income Manual para EIM35050.
      Note: Where s370 - 371 and s373 - 374 apply, a deduction is only allowable when the expenses have been paid or reimbursed by the employer.
      These are the income tax deductions.
• deduction where earnings include the cash equivalent of the benefit of a non-cash voucher or credit token used to purchase goods and services which would have qualified for a deduction (under one of the rules in this section) if the customer had paid for them directly
  For more information, use s362 and 363 of the ITEPA 2003.
  The deduction is the lesser of
  • the amount treated as earnings
    and
  • the amount that would have been deductible had they paid for the goods or services directly.
    This is income tax deduction. For more information, use the Employment Income Manual para EIM16170.
    Note: Although this deduction didn’t apply in the year 2001-2002, the same effect was achieved as the rules for valuing the cash equivalent of non-cash vouchers and credit tokens for the year provided for the cash equivalent in these cases to be reduced by an equivalent amount.
• from year 2003-2004 onwards, deduction for the expenses of Ministers of Religion permitted under s351 ITEPA 2003.
  Deductions are allowed from the earnings of a minister in respect of
  • expenses which are ‘wholly, exclusively and necessarily incurred’ in the performance of the duties of such employment
  • a proportion of the rent (up to a quarter) of a house used substantially in the performance of those duties
    and
  • where a property is occupied in which a charity or an ecclesiastical corporation holds an interest, a proportion of the expenses borne by the minister on the maintenance, repair, insurance or management of that property.
    These are the income tax deductions. For more information, use the Employment Income Manual paras EIM60040 and EIM60044.
• from year 2003-2004 onwards, deduction of sums fixed by the Treasury for the repair and maintenance of work equipment and for expenses from duties giving rise to earnings paid out of public revenue (permitted under s367 and s368 ITEPA 2003).
  The full list of ‘flat rate’ expenses allowable for income tax purposes are available for tax credits purposes (as shown on the Customs and Revenue Contact Centre Advisor Guide).
  This is the income tax deduction.
• from year 2003-2004 onwards, deduction for accommodation and subsistence costs while an employee is working abroad (permitted under s376 ITEPA 2003).
  To qualify, the employee must be resident and ordinarily resident in the UK and the duties of the employment must be performed wholly abroad. A deduction is generally only allowable for costs that have been paid or reimbursed by the employer.
  This is the income tax deduction. For more information, use the Employment Income Manual para EIM34030.
• from year 2003-2004 onwards, deduction of costs and expenses incurred in respect of personal security assets and services to meet an employment related threat to the employees personal security (permitted under s377 ITEPA 2003).
  This is the income tax deduction. For more information, use the Employment Income Manual para EIM21810.
• from year 2003-2004 onwards, deduction where mileage expense payments made to the employee or director are less than the approved amount for such payments (permitted under s231 and s232 ITEPA 2003).
  This is the income tax deduction. Follow the guidance in TCM0118200 for details of the approved mileage payments and the Employment Income Manual paras EIM31330 to EIM31385.