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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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The benefits code: more on working out if an employment has earnings of less than £8,500 a year: authorised deductions

Section 218(4) ITEPA 2003

This section only applies for 2015/16 and earlier.

EIM20101 explains how to calculate whether or not an employment has earnings of less than £8,500 a year.

Step 3 provides for the subtraction in the calculation of “authorised deductions” (Section 218(4) ITEPA 2003). The deductions concerned are (references to ITEPA 2003, unless otherwise stated):

  • capital allowances treated as deductions (Section 262 CAA 2001), EIM36890
  • employee liabilities and indemnity insurance (Section 346), EIM30500
  • expenses of entertainers (Section 352), EIM62800
  • payments by non-domiciled employees (Section 355)
  • fixed sum deductions from earnings out of the public purse (Section 368), EIM60720
  • various deductions for foreign travel expenses (Sections 370 to 376), EIM34000
  • personal security assets and services (Section 377), EIM21810
  • contributions to exempt approved superannuation schemes or exempt statutory schemes (Sections 592(7) and 594 ICTA 1988) and
  • payroll giving to charities (Section 713).

Deductions not included in the calculation

For the purpose of the calculation in Section 218 no deduction can be given for:

  • necessary expenses (Sections 336), EIM31600
  • expenses of travelling in the performance of the duties or to a temporary workplace (Sections 337 and 338), EIM31810
  • professional membership fees (Section 343), EIM32880
  • annual subscriptions (Section 344), EIM32880 and
  • clergymens’ expenses (Section 351), EIM60040.