The Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004

28.—(1) Amend Schedule 3 (payments to be disregarded in the calculation of earnings for the purposes of earnings-related contributions) as follows.

(2) In paragraph 2(2) of Part 2 (exception to the rule that payments by way of assets not to be disregarded) for the words from “if it would be disregarded” to the end of the sub-paragraph substitute “ if no liability to income tax arises by virtue of section 323 of ITEPA 2003 (long service awards) ”.

(3) In Part 5 (certain non-cash vouchers to be disregarded as payments in kind)—

(a) in paragraph 1(2)(b) (other circumstances in which a non-cash voucher may be disregarded) M1 for “incidental expenses” substitute “ incidental overnight expenses ”;

(b) in paragraph 2 (non-cash vouchers provided to employees of certain passenger transport undertakings)—

(i) for “an emolument” substitute “ general earnings ”;

(ii) for “section 141(1) of the Taxes Act” to the end of the sentence, substitute “ section 86 of ITEPA 2003 (transport vouchers under pre-26th March arrangements). ”;

(iii) for the words from “This paragraph applies”, to the end of the paragraph, substitute—

“This paragraph only applies in the case of an employee who is in lower paid employment, within the meaning of section 217 of ITEPA 2003”;

(c) for paragraphs 3 and 4 (non-cash vouchers in connection with parking spaces and cars available for private use), substitute—

“3.   A non-cash voucher exempted from liability to income tax under Chapter 4 of Part 3 by virtue of sections 266(1)(a) or 269 of ITEPA 2003 (exemptions: non-cash vouchers and credit-tokens).”; and

F1 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) In Part 6 (pensions and pension contributions)—

(a) for paragraph 2 substitute—

“Personal pension contributions by employers

2.   A payment by way of employer’s contribution towards a personal pension which is exempt from income tax by virtue of section 308(1) of ITEPA 2003 (exemption of contributions to approved personal pension arrangements).”.

(b) in paragraph 3 (approved statutory schemes, relevant statutory schemes, pilots' benefit funds and schemes established by overseas governments)—

(i) for sub-paragraph (a) substitute—

“(a) to which section 386 of ITEPA 2003 (charge on payments to non-approved retirement benefits schemes) does not apply by virtue of sections 387(2) or 390 of that Act;”;

(ii) in sub-paragraph (b) for “that Act” substitute “ the Taxes Act ”;

(iii) in sub-paragraph (c) for “applies; or” substitute “ or sections 590 (annuities) and 591 (taxable pension income) of ITEPA 2003 apply; or ”.

(5) In Part 7 (payments in respect of training and similar courses)—

(a) in paragraph 2 (work-related training)—

(i) for “section 200B, 200C and 200D of the Taxes Act (work-related training)” substitute “ sections 250 to 254 of ITEPA 2003 (exemption for work-related training) ”;

(ii) for “an emolument” substitute “ general earnings ”;

(b) in paragraph 3 (education and training funded by employers)—

(i) for “section 200E of the Taxes Act (exemption for education and training funded by employers)” substitute “ section 255 of ITEPA 2003 (exemption for contributions to individual learning account training) ”;

(ii) for “an emolument” substitute “ general earnings ”;

(c) after paragraph 9 M2 add—

“Working Neighbourhoods Pilot

10.   A payment made to a participant in a Working Neighbourhoods Pilot, arranged under section 2(1) of the Employment and Training Act 1973 M3 , in his capacity as such.

In-Work Credit

11.   A payment made to a participant in an In-Work Credit scheme, arranged under section 2(1) of the Employment and Training Act 1973, in his capacity as such.”.

(6) In Part 8 (travelling, relocation and other expenses and allowances of the employment)—

(a) in paragraph 2 (relocation expenses)—

(i) for sub-paragraph (2)(a)(i) substitute—

“(i) is not, by virtue of section 271 of ITEPA 2003 (limited exemption of removal benefits and expenses) liable to income tax as general earnings under that Act; or”;

(ii) in sub-paragraph (2)(a)(ii), for the words from “for that purpose” to the end of the sub-paragraph substitute “ by virtue of another provision of ITEPA 2003; or ”.

(iii) for sub-paragraph (7) substitute—

“(7) For the purposes of this paragraph, Chapter 7 of Part 4 of ITEPA 2003 shall be read as if sections 272 (1)(b), 272 (3)(b), 274 and 287 were omitted.”;

(b) in paragraph 3 (travelling expenses – general)—

(i) for “qualifying travelling expenses”, wherever it occurs, substitute “ travel expenses ”;

(ii) for “defray out of the emoluments of the office or employment” substitute “ pay as the holder of that office or employment ”;

(iii) in sub-paragraph (a)(ii), for “paragraph 2 of Schedule 12A to the Taxes Act” substitute “ section 338 of ITEPA 2003 (travel for necessary attendance) ”;

(iv) for sub-paragraph (b) substitute—

“(b) section 339 of ITEPA 2003 (meaning of “workplace” and “permanent workplace”) shall apply as it applies for the purposes of section 338 of that Act.”;

(c) for paragraphs 4 and 5 substitute—

“Travel at start or finish of overseas employment

4.   A payment of, or a contribution towards, the expenses of the earner’s employment to the extent that those expenses—

(a) are deductible for income tax purposes in accordance with section 341 of ITEPA 2003 (travel at start or finish of overseas employment); or

(b) would be so deductible if—

(i) Conditions B and C were omitted from that section; and

(ii) the earnings of the employment were subject to income tax as employment income under that Act.

Travel between employments where duties performed abroad

4A.   A payment of, or a contribution towards, the expenses of the earner’s employment to the extent that those expenses—

(a) are deductible for income tax purposes in accordance with section 342 of ITEPA 2003 (travel between employments where duties performed abroad), or

(b) would be so deductible if—

(i) Conditions E and F were omitted from that section; and

(ii) the earnings of the employment were subject to income tax as employment income under that Act.

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

4B.— (1) So much of an employed earner’s earnings as equals the amount in sub-paragraph (2).

(2) The amount in this sub-paragraph is—

(a) the included amount within the meaning of section 370 of ITEPA 2003 (travel costs and expenses where duties performed abroad: employee’s travel); or

(b) the amount which would be the included amount within the meaning of that section if the earner were resident and ordinarily resident in the United Kingdom.

Travel costs and expenses where duties performed abroad: visiting spouse’s or child’s travel

4C.— (1) So much of an employed earner’s earnings as equals the amount in sub-paragraph (2).

(2) The amount in this sub-paragraph is—

(a) the included amount within the meaning of section 371 of ITEPA 2003 (travel costs and expenses where duties performed abroad: visiting spouse’s or child’s travel); or

(b) the amount which would be the included amount within the meaning of that section if the earner were resident and ordinarily resident in the United Kingdom.

Foreign accommodation and subsistence costs and expenses (overseas employments)

4D.   So much of an employed earner’s earnings as equals the amount of the deduction—

(a) permitted for income tax purposes under section 376 of ITEPA 2003 (foreign accommodation and subsistence costs and expenses (overseas employments)); or

(b) which would be so permitted if the earnings of the employment were subject to tax as employment income under ITEPA 2003.

Travel costs and expenses of non-domiciled employee performing duties in the UK

5.   So much of an employed earner’s earnings as equals the aggregate amount of the deductions—

(a) permitted for income tax purposes under sections 373 and 374 of ITEPA 2003 (travel costs and expenses of a non-domiciled employee or the employee’s spouse or child where duties are performed in the United Kingdom ); or

(b) which would be so permitted if the earnings of the employment were subject to tax as employment income under ITEPA 2003.”;

(d) in paragraph 6 (travel expenses of workers on offshore gas and oil rigs) for the words from “the emoluments” to the end of the paragraph, substitute “ general earnings under section 305 of ITEPA 2003 (offshore oil and gas workers: mainland transfers). ”;

(e) in paragraph 7—

(i) for the heading substitute— “ Payments connected with cars and vans and exempt heavy goods vehicles provided for private use ”;

(ii) in sub-paragraph (a) for “section 157(3)(a) of the Taxes Act (car available for private use)”, substitute “ section 239(1) of ITEPA 2003 (payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles) ”;

(iii) in sub-paragraph (b) for “section 157(3)(c)” substitute “ section 239(2) ”;

(iv) for “an emolument” substitute “ general earnings ”; and

(v) omit “under Schedule E”;

(f) in paragraph 7B (qualifying amounts of mileage payments in respect of cycles) M4 —

(i) in sub-paragraph (2), for “paragraph 4(2) of Schedule 12AA to the Taxes Act”, substitute “ section 230(2) of ITEPA 2003 ”;

(ii) in sub-paragraph (3), for “section 197AD(2) of the Taxes Act” substitute “ section 229(2) of ITEPA 2003 ”.

(g) in paragraph 7C (qualifying amounts of passenger payments)—

(i) in sub-paragraph (2)—

(aa) in paragraph (a) for “carries a qualifying passenger; and” substitute “ receives passenger payments within the meaning of section 233(3) of ITEPA 2003; and ”;

(bb) in paragraph (b) for “paragraph 5 of Schedule 12AA to the Taxes Act”, substitute “ section 234 of ITEPA 2003 ”;

(ii) in sub-paragraph (3), for “section 197AE(2) of the Taxes Act” substitute “ section 233(3) of ITEPA 2003 ”;

(iii) omit the definition of “qualifying passenger”;

(h) for paragraph 7D substitute—

“Car fuel

7D.   A payment by way of the provision of car fuel which is chargeable to income tax under section 149 of ITEPA 2003.”;

(i) in paragraph 8 (car parking facilities)—

(i) for “section 197A of the Taxes Act” substitute “ section 237 of ITEPA 2003 ”; and

(ii) for “an emolument” substitute “ general earnings ”;

(j) in paragraph 10 (council tax on accommodation provided for employee’s use)—

(i) for “council tax”, where it occurs in the heading and the paragraph, substitute “ council tax or water or sewerage charges ”; and

(ii) for “he is not liable to tax” substitute “ he is not liable to income tax ”;

(k) in paragraphs 10 and 11 (rates on accommodation provided for employees' use in Northern Ireland)—

(i) for “section 145(4) of the Taxes Act (living accommodation)” substitute “ sections 99 or 100 of ITEPA 2003 (accommodation provided for performance of duties or as a result of a security threat) ”; and

(ii) omit “under Schedule E”;

(l) in paragraph 11 for “rates”, where it occurs in the heading and the paragraph, substitute “ rates or water or sewerage charges ”;

(m) in paragraph 12 (foreign service allowances) for “section 319 of the Taxes Act (Crown servants: foreign service allowance)” substitute “ section 299 of ITEPA 2003 (Crown employees' foreign service allowance) ”; and

(n) after paragraph 14 add—

“Experts Seconded to European Commission

15.   A payment in respect of daily subsistence allowances paid by the European Commission to persons whose services are made available to the Commission by their employers under the detached national experts scheme which is exempt from income tax by virtue of section 304 of ITEPA 2003 (experts seconded to European Commission).”.

(7) In Part 10 (miscellaneous and supplemental)—

(a) in paragraph 4 (payments by way of incidental expenses)—

(i) in the heading after “incidental” insert “ overnight ”;

(ii) for sub-paragraphs (1) and (2) substitute—

“(1) A payment by way of incidental overnight expenses, in whatever form, which by virtue of section 240 of ITEPA 2003 are not general earnings liable to income tax under that Act.

(2) If a payment is made by way of incidental overnight expenses in connection with a qualifying period, but the amount of that payment (calculated in accordance with section 241 of ITEPA 2003) exceeds the permitted amount, sub-paragraphs (3) to (6) apply.”;

(iii) for sub-paragraph (7) substitute—

“(7) In this paragraph—

“the cost of provision” in relation to a non-cash voucher is the cost incurred by the person at whose expense the voucher is provided;

“the permitted amount” has the meaning given in section 241(3) of ITEPA 2003; and

“qualifying period” has the meaning given in section 240(1)(b) and (4) of ITEPA 2003.”;

(b) for paragraph 8 substitute—

“Expenses and other payments not charged to income tax under miscellaneous exemptions

8.   A payment which is not charged to tax by virtue of any of the following provisions of ITEPA 2003—

(a) section 321 (suggestion awards);

(b) section 245 (travelling and subsistence during public transport strikes);

(c) section 246 (transport between work and home for disabled employees: general);

(d) section 248 (transport home: late night working and failure of car-sharing arrangements).”;

(c) for paragraph 10 substitute—

“Employee’s liabilities and indemnity insurance

10.   A payment which by virtue of section 346 of ITEPA 2003 (deduction for employee liabilities) is deductible from the general earnings of the employment chargeable to tax under that Act.”;

(d) in paragraph 11 (fees and subscriptions to professional bodies, learned societies etc), for the words from “section 201(1)” to the end of the paragraph substitute— “ section 343 or 344 of ITEPA 2003 (deduction for professional membership fees or annual subscriptions) is deductible from the general earnings of any office or employment. ”;

(e) for paragraph 14 substitute—

“Payments to miners and former miners, etc. in lieu of coal

14.— (1) A payment in lieu of the provision of coal or smokeless fuel, if the employee is—

(a) a colliery worker ;

(b) a former colliery worker;

and the condition in sub-paragraph (2) is met.

(2) The condition is that the amount of coal or fuel in respect of which the payment is made does not substantially exceed the amount reasonably required for personal use.

(3) That condition is assumed to be met unless the contrary is shown.

(4) In this paragraph, “colliery worker” means a coal miner or any other person employed at or about a colliery otherwise than in clerical, administrative or technical work; and “former colliery worker” shall be construed accordingly.

(5) This paragraph does not apply to Northern Ireland.”.

Textual Amendments

F1 Reg. 28(3)(d) revoked (6.4.2005) by Social Security (Contributions) (Amendment No.3) Regulations 2005 (S.I. 2005/778), regs. 1(1), 11

Marginal Citations

M1 Paragraph 1(2) was substituted by regulation 6 of S.1. 2002/307.

M2 Paragraph 9 was inserted by regulation 2(3) of S.I. 2003/2340 and substituted by regulation 5(3) of S.I. 2003/2958.

M3 1973 c. 50: section 2 was substituted by section 25(1) of the Employment Act 1988 (c. 19). There are amendments to section 2 which are not relevant for present purposes.

M4 Paragraphs 7A to 7D were inserted by regulations 2 and 7 of S.I. 2002/307.