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Income Tax (Earnings and Pensions) Act 2003

Section 374: Non-domiciled employee’s spouse’s or child’s travel costs and expenses where duties performed in UK

1636.This section provides that a deduction is allowed from earnings for travel costs and expenses where the journey in question is made by the employee’s spouse or child.

1637.The section derives from provisions in section 195(1), (2) and (6) to (10) of ICTA.

1638.Subsection (1) specifies the circumstances in which a deduction from earnings is allowed. See also Change 101(A) in Annex 1. The deduction is allowed if:

  • the employee is not domiciled in the United Kingdom;

  • the employee receives earnings from an employment for duties performed in the United Kingdom; and

  • an amount is included in the earnings in respect of the provision of travel facilities made by the employee’s spouse or child, or the reimbursement of expenses incurred by the employee on such a journey.

1639.Subsection (2) provides for the deduction from earnings to be allowed if:

  • the earnings are earnings charged on receipt (a term defined in section 335(4)); and

  • the conditions set out in subsections (3) to (5) are met.

1640.Condition A insubsection (3) reflects Inland Revenue practice in linking the five year period to the date when the journey was undertaken as opposed to the date when the expenditure was incurred. See Change 102 in Annex 1.

1641.Subsection (6) provides that if the journey is wholly for the purpose specified in subsection (5), the deduction allowed is equal to the included amount; and subsection (7) provides that if the journey is only partly for that purpose, the deduction allowed is only a proportion of the included amount.

1642.As in the case of section 373, references to an employee’s “usual place of abode” have been replaced by references to the country outside the United Kingdom in which the employee normally lives.

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