| Employment Income: Emoluments |
13 |
A payment for services may arise even if the service is not within the scope of duty. In Mudd v Collins57 a director who negotiated the sale of a branch of the company’s business was held taxable on the sum of £1,000 granted him by the company as commission. However, if the taxpayer can show that the payment is not for services but a testimonial, as in Cowan v Seymour,58 tax will not be due. Today, this decision must be considered borderline.59 |
14A.4.2 Reimbursements |
A payment by an employer to reimburse an expense incurred by the employee in the employment is not an emolument60 (but this situation is not without its critics61). This is so even if the employee would not have been able to deduct the expense himself under ITEPA section 336 TA 1988, section 198. However, it is assumed that this applies only to expenses incurred in connection with the employment.62 The reimbursment of an expense must be distinguished from an expense allowance, which is treated as an emolument.63 ITEPA pays much closer attention that previous legislation to the treatment of reimbursements and when are included and then excluded, especially in part 5 chapter 5; however nothing in ITEPA alters the position with regard to the first sentence of this paragraph. |