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Income Tax (Earnings and Pensions) Act 2003

Section 11: Calculation of “net taxable earnings”

55.Subsection (1) sets out how to calculate “net taxable earnings” in a tax year.

56.This explicit explanation of the calculation is new. See Note 4 in Annex 2.

57.The definition of “DE” is a pointer to the comprehensive list of all deductions available from earnings which appears in the opening Chapter of the Part dealing with deductions.

58.Subsection (3) is a signpost to what happens in the exceptional case that loss relief is available.

59.Subsection (4) gives effect to the general proposition that deductions may only be made from the earnings of the employment to which they relate. For example, section 198(1) says:


If the holder of an office or employment is obliged to incur and defray out of the emoluments of the office or employment


qualifying travelling expenses, or


any amount (other than qualifying travelling expenses) expended wholly, exclusively and necessarily in the performance of the duties of the employment,


there may be deducted from the emoluments to be assessed the amount so incurred and defrayed.

60.It is clear from such wording that in order to arrive at “net taxable earnings” where there is more than one employment, there must be a separate calculation for each employment.

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