The Tax Credits (Definition and Calculation of Income) Regulations 2002

CHAPTER 2U.K. Employment Income

Employment incomeU.K.

4.—(1) In these regulations “employment income” means—

(a)any [F1earnings] from an office or employment received in the tax year;

(b)so much of any payment made to a claimant in that year in respect of expenses as is chargeable to income tax [F2by virtue of section 62 or section 72 of ITEPA;]

(c)[F3the cash equivalent of] any non-cash voucher received by the claimant in that year and chargeable to income tax under [F4section 87 of ITEPA;]

(d)[F5the cash equivalent of] any credit-token received by the claimant in that year and chargeable to income tax under [F6section 94 of ITEPA;]

(e)[F7the cash equivalent of] any cash voucher received by the claimant in that year and chargeable to income tax under [F8section 81 of ITEPA;]

[F9(f)any amount chargeable to tax under Chapter 3 of Part 6 of ITEPA;]

(g)so much of a payment of statutory sick pay, received by the claimant during the year, as is subject to income tax [F10by virtue of section 660 of ITEPA;]

(h)the amount (if any) by which a payment of [F11statutory maternity pay, statutory paternity pay or statutory adoption pay] exceeds £100 per week;

(i)any amount charged to income tax for that year [F12under section 120 or section 149 of ITEPA;]

[F13(j)any sum to which section 225 of ITEPA applies;]

(k)any amount paid in that year by way of strike pay to the claimant as a member of a trade union.

[F14(l)any amount charged to income tax for that year under Part 7 of ITEPA.]

[F15(m)any amount paid to a person serving a custodial sentence or remanded in custody awaiting trial or sentence, for work done while serving the sentence or remanded in custody.]

For the purposes of this paragraph, references to the receipt of a payment of any description are references to its receipt by or on behalf of the claimant, or in the case of a joint claim of either of the claimants, in any part of the world.

This paragraph is subject to the following qualifications.

(2) Employment income does not include pension income.

F16(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F17(3) This paragraph applies if (apart from section 64 of ITEPA) the same benefit would give rise to two amounts (“A” and “B”)—

(a)“A” being an amount of earnings from a claimant’s employment as defined in section 62 of ITEPA, and

(b)“B” being an amount to be treated as earnings under any provision of Chapter 10 of Part 3 of ITEPA.

  • In such a case, the amount to be taken into account in computing the claimant’s employment income is the greater of A and B, and the lesser amount shall be disregarded.]

(4) In calculating employment income, the payments and benefits listed in Table 1 shall be disregarded.

Table 1
Payments [F18and benefits] disregarded in the calculation of employment income

1. Any payment in respect of qualifying removal expenses, or the provision of any qualifying removal benefit, within the meaning of [F19Chapter 7 of Part 4 of ITEPA].

[F202A. The payment or reimbursement of expenses incurred in the provision of transport to a disabled employee (as defined in section 246(4) of ITEPA) by his employer, if no liability to income tax arises in respect of that payment or reimbursement (as the case may be) by virtue of section 246 of ITEPA.

2B. The provision to a disabled employee (as defined in section 246(4) of ITEPA) by his employer of a car, the provision of fuel for the car, or the reimbursement of expenses incurred in connection with the car, if no liability to income tax arises in respect of that provision or reimbursement (as the case may be) by virtue of section 247 of ITEPA.

2C. The payment or reimbursement of expenses incurred on transport, if no liability to income tax arises in respect of that payment or reimbursement (as the case may be) by virtue of section 248 of ITEPA.]

3. Travel facilities provided for the claimant as a member of the naval, military or air forces of the Crown for the purpose of going on, or returning from, leave.

[F213A. The 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.]

[F223B. 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.]

4. Payment or reimbursement of expenses in connection with the provision for, or use by, the claimant as a person holding an office or employment of a car parking space at or near his place of work.

5. Any benefit or non-cash voucher provided to the claimant, or to any member of his family or household, [F23in respect of which no liability to income tax arises by virtue of Chapter 5 of Part 4 of ITEPA.]

6. Any payment of incidental overnight expenses [F24in respect of which no liability to income tax arises by virtue of section 240 of ITEPA.]

[F257. Food, drink and mess allowances for the armed forces and training allowances payable to members of the reserve forces in respect of which no liability to income tax arises by virtue of section 297 or 298 of ITEPA.]

8. The value of meal vouchers issued to the claimant as an employee, [F26if section 89 of ITEPA applies to the vouchers.]

9. Any cash payment received by the claimant as a miner in lieu of free coal, or the provision of the coal itself, [F27in respect of which no liability to income tax arises by virtue of section 306 of ITEPA.]

10. An award made to the claimant as a director or employee by way of a testimonial to mark long service, [F28if, or to the extent that, no liability to income tax arises in respect of it by virtue of section 323 of ITEPA.]

11. Payment of a daily subsistence allowance [F29in respect of which no liability to income tax arises by virtue of section 304 of ITEPA.]

[F3011A. The payment or reimbursement of reasonable expenses incurred by an employee who has a permanent workplace at an offshore installation, on transfer transport, related accommodation and subsistence or local transport, if no liability to income tax arises in respect of that payment or reimbursement (as the case may be) by virtue of section 305 of ITEPA.

For the purposes of this item, expressions which are defined in section 305 of ITEPA have the same meaning here as they do there.

11B. Payment of an allowance to a person in employment under the Crown in respect of which no liability to income tax arises by virtue of section 299 of ITEPA.

11C. The payment or reimbursement to an employee of any sum in connection with work-related training, or individual learning account training (as respectively defined in sections 251 and 256 of ITEPA) if no liability to income tax arises in respect of that payment or reimbursement (as the case may be) by virtue of any provision of Chapter 4 of Part 4 of ITEPA.

11D. The provision for an employee of a non-cash voucher or a credit-token, to the extent that liability to income tax does not arise in respect of that voucher or credit-token (as the case may be), under Chapter 4 of [F31Part 3 of ITEPA, by virtue of any provision of Chapter 6 of Part 4 of ITEPA].

11E. The provision for an employee of free or subsidised meal vouchers or tokens (within the meaning of section 317(5) of ITEPA), if no liability to income tax arises in respect of that provision by virtue of section 317 of ITEPA.]

[F3211F. The provision of one mobile telephone for an employee in respect of which no liability to income tax arises by virtue of section 319 of ITEPA.]

12. An award made to the claimant under a Staff Suggestion Scheme, if the conditions specified in [F33sections 321 and 322 of ITEPA [F34are satisfied].]

13. Travelling and subsistence allowances paid to or on behalf of the claimant by his employer [F35in respect of which no liability to income tax arises by virtue of section 245 of ITEPA.]

14. Any gift consisting of goods, or a voucher or token to obtain goods, [F36in respect of which no liability to income tax arises by virtue of section 270 or 324 of ITEPA.]

[F3714A. Any payment or reimbursement of expenses incurred in connection with an employment-related asset transfer (as defined in section 326(2) of ITEPA), if no liability to income tax arises in respect of that payment or reimbursement (as the case may be) by virtue of section 326 of ITEPA.

14B. Any payment of expenses incurred by an employee in connection with a taxable car if no liability to income tax arises in respect of the payment by virtue of section 239(2) of ITEPA.]

[F3814C.The discharge of any liability of an employee in connection with a taxable car if no liability to income tax arises by virtue of section 239(1) of ITEPA.

14D.A benefit connected with a taxable car if no liability to income tax arises by virtue of section 239(4) of ITEPA.]

15. A cash voucher, non-cash voucher or credit-token to the extent that it is used by the recipient for the provision of child care, the costs of which if borne by the recipient would be relevant child care charges within the meaning of regulation 14 of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 M1.

[F3916. A payment made by the Department for Work and Pensions under section 2 of the Employment Act—

(a)

by way of In-Work Credit, Job Grant or Return to Work Credit, or

(b)

under the Employment Retention and Advancement Scheme or the Working Neighbourhoods Pilot]

[F4016A. A payment made by the Department for Employment and Learning in Northern Ireland under section 1 of the Employment and Training Act (Northern Ireland) 1950 by way of Return to Work Credit.]

[F4117.The payment or reimbursement of reasonable additional household expenses incurred by an employee who works from home, within the meaning of section 316A of ITEPA.

18.The payment or reimbursement of retraining course expenses within the meaning of section 311 of ITEPA.]

[F4219. Provision of computer equipment in respect of which no liability to income tax arises by virtue of section 320 of ITEPA.]

(5) From the amount of employment income, calculated in accordance with the preceding provisions of this regulation, there shall be deducted the amount of any deduction permitted in [F43calculating earnings by virtue of any provision of sections [F44231 to 232,] 336 to 344, or section 346, 347, 351, 352, 362, 363, 367, 368, 370, 371, 373, 374, 376, 377 or 713 of ITEPA].

Textual Amendments

Marginal Citations