4 |
13A.1.2 Expenses |
The rules on expenses are found in part 5 of the Act. By ITEPA section 336 (TA 1988, section 198) expenses are deductible in calculating taxable earnings income if they are incurred wholly, exclusively and necessarily in the performance of the duties of the office or employment. Travelling expenses have their own rule—they must be ‘qualifying travelling expenses’. These are either (i) ‘necessarily incurred in the performance of the duties of’ the office or employment, a long-established and interestingly litigated expression, or (ii) come within a new category, established in 1998, relating to travel to or from a temporary workplace. The holder of the office or employment must, in either case, have been obliged to incur and have defrayed the expenses ‘out of ’ the emoluments; these words mean, in the Revenue view, that no claim for loss relief can arise under schedule E. |
Capital allowances may be claimed by the employee in respect of machinery and plant if incurred necessarily.9 |
| Most emoluments paid by the employer are subject to a system of deduction of tax at source—the PAYE system.10 Whether or not subject to that system, income is assessed on a current year basis. It is taxed on when it is received or becomes due for payment, whichever is the earlier; the old case-law rule which backdated payments to the year in which the service was performed was abolished in 1989.11 |
13A.2 Office or Employment |
13A.2.1 Office |
ITEPA taxes employment income from employments and offices.12 ‘It goes on to define an office as ‘including in particular’ any position which has an existence independent of the person who fills it, and which is filled in succession by successive holders’.13 Examples include a director of a company,14 even if under a contract of employment and owning all the shares, a trustee or executor,15 |