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HMRC internal manual

Employment Income Manual

Employment income: further education and training costs: Individual Training Accounts: where the exemption does not apply

Sections 257 to 260 ITEPA 2003

Sections 257 to 260 ITEPA 2003 set out circumstances where the exemption allowed by section 255 (see EIM1315) does not apply. Those circumstances are as follows.

Non-deductible travel expenses

Where travel or subsistence is provided or the costs of travel or subsistence are paid or reimbursed, the exemption only applies to the extent that:

  • mileage allowance relief under Chapter 2 of Part 4 of ITEPA would be available for the travel if no mileage allowance payment had been made, or
  • the expenses of the travel or subsistence would be deductible under Part 5 of ITEPA

For either of these conditions to apply there must be an assumption that the employee undertook the training as one of the duties of employment and that they incurred and paid the expenses.

Provision for excluded purposes

The exemption does not apply if, or to the extent that, the facilities or benefits provided:

  • enable the employee or former employee to enjoy them for entertainment or recreational purposes (including in the course of a leisure activity), and
  • reward the employee or former employee for performing duties of the employment or former employment or performing them in a particular way

Provision of unrelated assets 

The exemption does not apply if the benefit provided is an asset that is not a training-related asset. A training-related asset means:

  • an asset provided for use only in the course of the training, or
  • an asset provided for use in the course of training and in the employee’s employment, but not significantly for any other use, or
  • training materials provided during the training, or
  • something made by the trainee during the training or incorporated into something made during the training

Training not generally available to staff 

The exemption only applies if the expenditure involved is incurred in giving effect to arrangements that provide:

  • for the person incurring it to contribute to costs arising from the undertaking of ILA training by the employer’s employees or former employees, and
  • for such contributions to be generally available on similar terms to the employer’s employees at that time