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

Employment income

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

(a) any emoluments 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 under section 19(1) or 153 of the Taxes Act;

(c) any non-cash voucher received by the claimant in that year and chargeable to income tax under section 141 of the Taxes Act(1);

(d) any credit-token received by the claimant in that year and chargeable to income tax under section 142 of the Taxes Act(2);

(e) any cash voucher received by the claimant in that year and chargeable to income tax under section 143 of the Taxes Act(3);

(f) so much of a payment under the Employment Rights Act 1996(4) as is chargeable to income tax under section 148 of the Taxes Act;

(g) so much of a payment of statutory sick pay, received by the claimant during the year, as is subject to income tax under Schedule E by virtue of section 150(c) of the Taxes Act(5);

(h) the amount (if any) by which a payment of statutory maternity pay exceeds £100 per week;

(i) any amount charged to income tax for that year under section 157 of the Taxes Act (car made available for private use) or section 158 of that Act (car fuel);

(j) any sum to which section 313 of the Taxes Act (taxation of consideration for certain restrictive undertakings)(6) applies;

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

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.

(3) This paragraph applies in the case of a claimant who is in employment to which Chapter 2 of Part 5 of the Taxes Act applies.

Where this paragraph applies, and the cash equivalent of an emolument chargeable to income tax under section 154 of the Taxes Act, calculated in accordance with subsection (2), (3) or (4) of section 156 of that Act, is greater than the value of the emolument calculated otherwise than in accordance with those provisions (“the lesser value”), the amount produced by them shall be taken into account and the lesser value disregarded.

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

Table 1

Payments 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 Schedule 11A to the Taxes Act(7). 2.  Payments in respect of expenses which are wholly, exclusively and necessarily incurred in the performance of the duties of the claimant’s employment or which are qualifying travelling expenses within section 198(1A) of the Taxes Act(8). 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. 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, falling within section 197G of the Taxes Act (sporting and recreational facilities)(9). 6.  Any payment of incidental overnight expenses falling within section 200A of the Taxes Act(10). 7.  So much of a gratuity payable to a member of the Armed Forces which is exempt under section 316 of the Taxes Act. 8.  The value of meal vouchers issued to the claimant as an employee, if the conditions specified in Inland Revenue Extra Statutory Concession A2 are satisfied. 9.  Any cash payment received by the claimant as a miner in lieu of free coal, or the provision of the coal itself, in relation to which income tax is not charged under Inland Revenue Extra Statutory Concession A6. 10.  An award made to the claimant as a director or employee by way of a testimonial to mark long service, if the conditions specified in Inland Revenue Extra Statutory Concession A22 are satisfied. 11.  Payment of a daily subsistence allowance to which Extra Statutory Concession A84 applies. 12.  An award made to the claimant under a Staff Suggestion Scheme, if the conditions specified in Inland Revenue Extra Statutory Concession A57 are satisfied. 13.  Travelling and subsistence allowances paid to or on behalf of the claimant by his employer which fall within Inland Revenue Extra Statutory Concession A58 (public transport disruption). 14.  Any gift consisting of goods, or a voucher or token to obtain goods, if the conditions specified in Inland Revenue Extra Statutory Concession A70 are satisfied. 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(11).

(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 calculating emoluments for the purposes of Schedule E by virtue of—

(a) section 201 of the Taxes Act (deductions for fees and subscriptions to professional bodies and learned societies);

(b) section 201AA of the Taxes Act (deductions in connection with employee liabilities and indemnity insurance)(12);

(c) section 201A of the Taxes Act (entertainers' expenses)((13); or

(d) under section 202(2) of the Taxes Act (payroll deduction scheme for payments to charity)(14).

(1)

Section 141 was amended by sections 46 and 47 of the Finance Act 1988 (c. 39), paragraph 46 of Schedule 18 to the Companies Act 1989 (c. 40), section 89(1) to (3) of the Finance Act 1994 and sections 91(2) and (3) and 93(1) and (5) of the Finance Act 1995.

(2)

Section 142 was amended by sections 46 and 48 of the Finance Act 1988, section 89(4) to (7) of the Finance Act 1994 and sections 91(2) and (3) and 93(1) and (5) of the Finance Act 1995.

(3)

Section 143 was amended by section 89(8) to (11) of the Finance Act 1994.

(4)

1996 c. 8.

(5)

There is an amendment not relevant for present purposes. To the extent that it is paid by an employer statutory sick pay is an emolument falling within Schedule E.

(6)

Section 313 was amended by section 73 of the Finance Act 1988.

(7)

Schedule 11A was inserted by Schedule 5 to the Finance Act 1993 (c. 34).

(8)

Subsections (1) to (1B) of section 198 were substituted for subsection (1) of that section by section 61(1) of the Finance Act 1998.

(9)

Section 197G was inserted by section 75 of the Finance Act 1993.

(10)

Section 200A was inserted by section 93(4) of the Finance Act 1995 (c. 4).

(11)

S.I. 2002/2005.

(12)

Section 201AA was inserted by section 91 of the Finance Act 1995.

(13)

Section 201A was inserted by section 77 of the Finance Act 1990 (c. 29), amended by section 69 of the Finance Act 1991 and partly repealed by Schedule 17 to the Deregulation and Contracting-Out Act 1994 (c. 40).

(14)

Section 202 was amended by section 109 of the Finance Act 1996 (c. 8).