SCHEDULE 3 PAYMENTS TO BE DISREGARDED IN THE CALCULATION OF EARNINGS FOR THE PURPOSES OF EARNINGS-RELATED CONTRIBUTIONS
PART VIII TRAVELLING, RELOCATION AND OTHER EXPENSES AND ALLOWANCES OF THE EMPLOYMENT
Travelling, relocation and incidental expenses disregarded1
The travelling, relocation and other expenses and allowances mentioned in this Part are disregarded in the calculation of an employed earner’s earnings.
Relocation expenses2
1
A payment of, or contribution towards, expenses reasonably incurred by a person in relation to a change of residence in connection with the commencement of, or an alteration in the duties of the person’s employment or the place where those duties are normally to be performed is disregarded if the conditions in sub-paragraphs (2) to (6) are met.
2
The first condition is that—
a
the payment or contribution—
F7i
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
would not have been so regarded, but is in fact disregarded F8by virtue of another provision of ITEPA 2003; or
b
the person concerned commenced performance of the duties, or altered duties, of his employment at the place, or the altered place, of their performance before 6th April 1998.
3
The second condition is that the change of residence must result from—
a
the employee becoming employed by an employer;
b
an alteration of the duties of the employee’s employment (where his employer remains the same); or
c
an alteration of the place where the employee is normally to perform the duties of his employment (where both the employer and the duties which the employee is to perform remains the same).
4
The third condition is that the change of residence must be made wholly or mainly to allow the employee to have his residence within a reasonable daily travelling distance of—
a
the place where he performs, or is to perform, the duties of his employment (in a case falling within paragraph (3)(a);
b
the place where he performs, or is to perform, the duties of his employment (in a case falling within paragraph (3)(b); or
c
the new place where he performs, or is to perform, the duties of his employment (in a case falling within paragraph (3)(c).
References in this sub-paragraph and sub-paragraph (5) to the place where the employee performs, or is to perform, the duties of his employment are references to the place where he normally performs, or is normally to perform, the duties of the employment.
5
The fourth condition is that the employee’s former residence must not be within a reasonable daily travelling distance of the place where the employee performs or is to perform the duties of the employment.
6
In a case to which sub-paragraph (2)(b) applies, expenditure incurred in pursuance of a contract or agreement entered into before 6th April 1998 does not, in the case of a contract or agreement varied at any time on or after that date, include so much of the expenditure incurred under that contract or agreement which would not have been incurred, or exceeds the amount of expenditure that would have been reasonably incurred, if that contract or agreement had not been so varied.
F97
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
Travelling expenses—general3
For the purposes of this paragraph—
a
“F35travel expenses ” means—
i
amounts necessarily expended on travelling in the performance of the duties of the office or employment; or
ii
other expenses of travelling which are attributable to the necessary attendance at any place of the holder of the office or employment in the performance of the duties of the office or employment and are not expenses of ordinary commuting or private travel (within the meaning of F37section 338 of ITEPA 2003 (travel for necessary attendance);
F38b
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
expenses of travel by the holder of an office or employment between two places at which he performs the duties of different offices or employments under or with companies in the same group are treated as necessarily expended in the performance of the duties which he is to perform at his destination; and
d
for purpose of sub-paragraph (c) companies are to be taken to be members of the same group if and only if—
i
one is a 51 per cent subsidiary of the other; or
ii
both are 51 per cent subsidiaries of a third company
within the meaning of section 838(1)(a) of the Taxes Act (subsidiaries).
F6Travel at start or finish of overseas employment4
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 abroad4A
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 travel4B
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’sF41, civil partner's or child’s travel4C
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’sF42, civil partner'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.
F40Travel costs and expenses of non-domiciled employee or the employee’s spouse, civil partner or child where duties performed in the United Kingdom5
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 spouseF43, civil partner 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.
Travelling expenses of workers on offshore gas and oil rigs6
A payment of, or a contribution towards, expenses where that payment or contribution is disregarded for the purposes of calculating the emoluments F39general earnings under section 305 of ITEPA 2003 (offshore oil and gas workers: mainland transfers).
F10Payments connected with cars and vans and exempt heavy goods vehicles provided for private use7
A payment—
a
by way of the discharge of any liability which by virtue of F11section 239(1) of ITEPA 2003 (payments and benefits connected with taxable cars and vans and exempt heavy goods vehicles); or
b
of expenses, which by virtue of F12section 239(2) of that Act;
F1Qualifying amounts of relevant motoring expenditure7A
To the extent that it would otherwise be earnings, the qualifying amount calculated in accordance with regulation 22A(4).
Qualifying amounts of mileage allowance payment in respect of cycles7B
1
To the extent that it would otherwise be earnings, the qualifying amount of a mileage allowance payment in respect of a cycle.
2
The qualifying amount is that which would be produced by the formula in regulation 22A(4) if the value for R were the rate for the time being approved under F15section 230(2) of ITEPA 2003 in respect of a cycle.
3
In this paragraph—
“cycle” has the meaning given in section 192(1) of the Road Traffic Act 1988; and
“mileage allowance payment” has the meaning given in F16section 229(2) of ITEPA 2003.
Qualifying amounts of passenger payment7C
1
To the extent that it would otherwise be earnings, the qualifying amount of a passenger payment.
2
The qualifying amount is that which would be produced by the formula in regulation 22A(4) if—
a
references to business travel were to business travel for which the employee F17receives passenger payments within the meaning of section 233(3) of ITEPA 2003; and
b
the value for R were the rate for the time being approved for a passenger payment under F18section 234 of ITEPA 2003.
3
F21Car fuel7D
1
A payment by way of the provision of car fuel which is chargeable to income tax under section 149 of ITEPA 2003.
F46Van fuel7E
A payment by way of the provision of van fuel which is chargeable to income tax under section 160 of ITEPA 2003.
Car parking facilities8
Specific and distinct payments of, or towards, expenses actually incurred9
F21
For the avoidance of doubt, these shall be disregarded any specific and distinct payment of, or contribution towards, expenses which an employed earner actually incurs in carrying out his employment.
F3This is subject to the following qualification.
F42
Sub-paragraph (1) does not authorise the disregard of any amount by way of relevant motoring expenditure, within the meaning of paragraph (3) of regulation 22A, in excess of that permitted by the formula in paragraph (4) of that regulation.
F24council tax or water or sewerage charges on accommodation provided for employee’s use10
A payment of, or a contribution towards meeting a person’s liability for F25council tax or water or sewerage charges in respect of accommodation occupied by him and provided for him by reason of his employment if by virtue of F27sections 99 or 100 of ITEPA 2003 (accommodation provided for performance of duties or as a result of a security threat), F26he is not liable to income taxF30... in respect of the provision of that accommodation.
This paragraph does not extend to Northern Ireland.
F31rates or water or sewerage charges on accommodation provided for employee’s use11
A payment of, or a contribution towards meeting, a person’s liability for F32rates or water or sewerage charges in respect of accommodation occupied by him and provided for him by reason of his employment if by virtue of F28sections 99 or 100 of ITEPA 2003 (accommodation provided for performance of duties or as a result of a security threat), he is not liable to income taxF29... in respect of the provision of that accommodation.
This paragraph extends only to Northern Ireland.
Foreign service allowance12
A payment by way of an allowance which is not regarded as income for any income tax purpose by virtue of F33section 299 of ITEPA 2003 (Crown employees' foreign service allowance).
F44HM Forces’ operational allowance12A
A payment by the Secretary of State for Defence of an operational allowance to a member of Her Majesty’s forces in respect of service in an operational area specified by the Secretary of State for Defence.
F45HM Forces' Council Tax Relief12B
A payment designated by the Secretary of State for Defence as Council Tax Relief and made by the Secretary of State for Defence to a member of Her Majesty's forces.
Commonwealth War Graves Commission and British Council: extra cost of living allowance13
A payment by way of an allowance to a person in the service of the Commonwealth War Graves Commission or the British Council paid with a view to compensating him for the extra cost of living outside the United Kingdom in order to perform the duties of his employment.
Overseas medical treatment14
A payment of, or a contribution towards, expenses incurred in—
a
providing an employee with medical treatment outside the United Kingdom (including providing for him to be an in-patient) in a case where the need for the treatment arises while the employee is outside the United Kingdom for the purposes of performing the duties of his employment; or
b
providing insurance for the employee against the cost of such treatment in a case falling within sub-paragraph (a).
Here “medical treatment” includes all forms of treatment for, and all procedures for diagnosing, any physical or mental ailment, infirmity or defect.
F5Experts Seconded to European Commission15
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).
F48Experts seconded to a body of the European Union15A
A payment in respect of subsistence allowances paid—
a
by a body of the European Union that is located in the United Kingdom and listed in the table below;
b
to persons who, because of their expertise in matters relating to the subject matter of the functions of the body, are seconded to the body by their employers.
Bodies of the European Union located in the United Kingdom |
The European Medicines Agency |
The European Police College |
The European Banking Authority |
F47Expenses of MPs and other representatives16
A payment to which no liability to income tax arises by virtue of any of the following provisions of ITEPA 2003—
a
section 292 (accommodation expenses of MPs);
b
section 293 (overnight expenses of other elected representatives);
c
section 293A (UK travel and subsistence expenses of MPs);
d
section 294 (European travel expenses of MPs and other representatives).