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18A.1 Introduction |
ITEPA part 5 contains six chapters and provides two main sets of rules for deductions—in chapters 2 (sections 333-360) and 5 (sections 359–377). Chapter 2 reenacts well—known and mostly long established rules for expenses paid by employees. Chapter 5 brings together rules on deductions for earnings representing benefits under the benefits code eg chapter 3 part 10 or reimbursed expenses within chapter 3 part 3; these have been ‘included’ under chapter 3 now have to be excluded if they meet the conditions for chapter 5 part 5. Of the remaining chapters of part 5, chapter 1 provides some general rules for deductions (which will be considered in the context of chapter 2), chapter 3 deals with deductions from benefits code earnings, chapter 4 authorises fixed sum allowances for repairing and maintaining work equipment (previously concession A1) or payable out of the public revenue. Chapter 6 covers deductions for seafarers earnings. |
For chapter 2 three principal provisions must be kept in mind when considering the deductibility of expenses paid by the employee. First, ITEPA section 336 (ex TA 1988, section 198, as rewritten in 1998),1 allows a deduction from earnings if (a) the employee is obliged to incur and pay the expense as holder of the employment and (b) the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the office or employment. Secondly and thirdly, Sections 337 and 338 enact two travel expense rules. In each case the first element is the same as that for section 336, part (a)—ie the employee must be obliged to incur the expense2 and must pay it as holder of the employment.3 Section 337 after repeating part (a) five as part (b) which, echoing nineteenth century law, requires that the expense be necessarily incurred on travelling in the performance of the duties of the employment. Section 338, which dates back to only 1998, requires (b) that the expenses must be attributable to the employee’s necessary attendance at any place in the performance of the duties of the employment. These words preserve many of the old concepts. One minor presentational change, made in 1998, was the removal of a reference to the |