The general rule for employees expenses: key words and phrases
The general rule for employees’ expenses is very restrictive. All of the tests imposed by Section 336 ITEPA 2003 must be passed before a deduction is obtained. The tests are stringent and exacting, see EIM31636. It is important that you get all of the facts before you make a decision, see EIM31635.
The rules for travelling expenses are different to the general rule for employees’ expenses, see EIM31810.
The tests that apply before a deduction can be permitted under Section 336 are
- the expense must be one that each and every holder of that employment would have to incur, see EIM31640
- the expense must be necessarily incurred, see EIM31645
- the expense must be incurred in the performance of the duties of the employment, see EIM31650
- the expense must be incurred and paid , see EIM31655
- the expense must be wholly and exclusively so incurred, see EIM31660.
There is a useful summary of these tests in paragraph 8 of the judgment of Lightman J.in Ansell v Brown (73TC338).