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HMRC internal manual

Employment Income Manual

Deductions from general earnings: the benefits code

Sections 361 to 365 ITEPA 2003

EIM31611 lists the circumstances in which a deduction may be available for certainexpenses that an employee incurs and pays out of general earnings. The employee may alsobe treated as having received earnings from the employment where amounts are treated asearnings under the benefits code, including:

  • sums in respect of expenses, Sections 70 to 72 ITEPA 2003, see EIM20601, or
  • vouchers or credit tokens, Sections 73 to 96 ITEPA 2003, see EIM16000, or
  • living accommodation, Sections 97 to 113 ITEPA 2003, see EIM11300, or
  • employment-related benefits, Sections 201 to 210 ITEPA 2003, see EIM20001.

A sum received by an employee as a reimbursement of expenses, or an expense paid on theemployee’s behalf, may be treated as general earnings. A deduction is permitted from thatcharge to the same extent as it would have been permitted if the expense had been paid bythe employee or the reimbursement had not been made. For an example of a deduction from anexpense see example EIM31616.

Similarly, where an amount is charged as general earnings by the benefits code a deductionis permitted to the extent that a deduction would have been permitted if the employee hadincurred and paid an equivalent expense. For an example of a deduction from a benefit seeexample EIM31617. For an example of a deduction from a livingaccommodation charge see example EIM31618.