1282.This section provides for limited exemptions from income tax in respect of redundancy payments and approved contractual payments.
1283.Subsection (1) provides that there is no liability to income tax on redundancy payments and approved contractual payments as general earnings, except where subsection (2) applies. That subsection applies where the amount of an approved contractual payment exceeds the amount which would have been due if a redundancy payment had been payable. In such a case the excess is liable to income tax.
1284.Subsection (3) provides that there is no liability to income tax on redundancy payments and approved contractual payments as specific earnings, except under Part 6 Chapter 3 (payments and benefits on termination of employment).
1285.This section derives from parts of sections 579 and 580 of ICTA. It is drafted by reference to an “approved contractual payment” as opposed to the “corresponding amount of any other employer’s payment” – the expression used in section 579(1). The section also introduces the expression “statutory payment” to describe the sum specified in section 579(6). These new expressions should make the legislation easier to follow. They also have the consequence that it is possible to dispense with the definition of “the Minister” in section 580(1)(c).
1286.This section provides there is no liability to income tax on the provision of counselling and other services in connection with the cessation of a person’s employment.
1287.It derives from sections 589A and 589B of ICTA as they apply to an employee. The provisions of 589A and 589B as they apply to an employer do not change, except that they have been amended to reflect the minor changes to the law made in this section. See paragraph 69 of Schedule 6.
1288.Subsection (1) provides the exemption and the conditions to be satisfied.
1289.Subsection (2) sets out condition A, which relates to the purpose of the provision of the services.
1290.Subsection (3) sets out condition B, which relates to the services provided.
1291.Subsection (4) sets out condition C, which relates to the qualifying two year period of continuous employment.
1292.Under the Employment Rights Act 1996, some events that involve a change in the identity of the employer are treated as not breaking the continuity of employment. The two year requirement is therefore expressed in terms of the employment that is ceasing, not of employment by the employer. See Change 71 in Annex 1.
1293.Subsection (5) sets out condition D, which relates to the availability of the services to employees generally.
1294.Subsection (6) sets out condition E, which relates to travel expenses.
1295.Travel expenses meeting condition E include expenses that, on the assumptions in subsection (7), would be deductible under any provision of Part 5. Under ICTA, expenses within the exemption are restricted to expenses deductible only under selected sections of those rewritten in that Part. See Change 73 in Annex 1.
1296.This section is listed in section 332 (meaning of “the deductibility provisions”). Various provisions in Part 5 then ensure that certain rules in Part 5 do not adversely restrict expenses, deductible under that Part, for the purposes of condition E.
1297.Subsection (7) sets out the assumptions made in applying condition E to travelling expenses. To accord with Inland Revenue practice, one of those assumptions is that the expenses are incurred and paid by the employee. But the assumption that they are paid out of emoluments has not been rewritten. See Change 81 in Annex 1.
1298.To accord with Inland Revenue practice, the section omits the condition in section 589B(2)(e) of ICTA, that the services are provided in the United Kingdom, and the apportionment rule in section 589B(3) which applies if services are provided partly in and partly outside the United Kingdom. A similar condition, in section 589(1)(d) of ICTA, has been omitted from section 311 for the same reason. Removal of this condition aligns sections 310 and 311 with the exemptions in Chapter 4 of Part 4. See Change 72 in Annex 1.
1299.This section provides there is no liability to income tax on payment or reimbursement of retraining course expenses when a person’s employment has ceased or is expected to cease.
1300.It derives from sections 588 and 589 of ICTA as they apply to an employee. The provisions of 588 and 589 as they apply to an employer do not change, other than to adopt the minor changes to the law made in this section. See paragraph 67 of Schedule 6.
1301.Subsection (1) provides the exemption and the conditions to be satisfied.
1302.Subsection (2) defines “retraining course expenses” for the purposes of the exemption.
1303.Subsection (3) sets out the course conditions.
1304.The section does not require a course to be undertaken “with a view to retraining the employee”. In practice a course is regarded as so undertaken if the conditions in the section are satisfied. This additional requirement is superfluous. See Change 74 in Annex 1.
1305.To accord with Inland Revenue practice, the section also omits the condition in section 589(1)(d) of ICTA, that all teaching and practical application forming part of the course takes place in the United Kingdom. A similar condition, in section 589B(2)(e) of ICTA, has been omitted from section 310 for the same reason. Removal of this condition aligns sections 310 and 311 with the exemptions in Chapter 4 of Part 4. See Change 72 in Annex 1.
1306.Subsection (4) sets out the employment conditions.
1307.Under the Employment Rights Act 1996, some events that involve a change in the identity of the employer are treated as not breaking the continuity of employment. The requirement that the employee be employed continuously for two years prior to retraining or, if earlier, when the employment ceased, is therefore expressed, as in section 310(4), in terms of the employment that is ceasing, not of employment by the employer.
1308.Expressing the requirement this way aligns sections 310 and 311 in their treatment of the same requirement. See Change 71 in Annex 1.
1309.Subsection (5) sets out the conditions that relate to travelling expenses.
1310.As in section 310, travel expenses meeting this condition include expenses that, on the assumptions in subsection (6), would be deductible under any provision of Part 5. Under ICTA, expenses within the exemption are restricted to expenses deductible only under selected sections of those rewritten in that Part. See Change 73 in Annex 1.
1311.This section is listed in section 332 (meaning of “the deductibility provisions”). Various provisions in Part 5 then ensure that certain rules in Part 5 do not adversely restrict expenses, deductible under that Part, for the purposes of subsection (5).
1312.Subsection (6) sets out the assumptions made in applying the condition in subsection (5) to travelling expenses. To accord with Inland Revenue practice, one of those assumptions is (as in section 310) that the expenses are incurred and paid by the employee. But the assumption that they are paid out of emoluments has not been rewritten. See Change 81 in Annex 1.
1313.This section provides machinery for an assessment to charge the amount due if exemption under section 311 has been given and there is a subsequent failure to meet certain of the conditions in section 311(4).
1314.It derives from section 588 of ICTA.
1315.Subsection (1) sets out the circumstances in which the section applies.
1316.Subsection (2) sets out what will be assessed if the section applies, and provides the mechanism for such an assessment.
1317.Subsection (3) provides the time limit for the making of such an assessment.
1318.Subsections (4) to (6) contain provisions which:
require the employer or former employer to notify the Inland Revenue of a failure within the terms of subsection (1) to meet the conditions in section 311(4); and
permit the Inland Revenue to require information from a person they have reason to believe has failed to fulfil that requirement.