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HMRC internal manual

Employment Income Manual

The general rule for employees’ expenses: necessarily incurred

The preceding paragraphs establish that the general rule for employees’ expensesin Section 336 ITEPA 2003 imposes an objective test; an expense can only be deductible ifit is one that each and every holder of an employment would be obliged to incur. Adeductible expense must also be one that is “necessarily” imposed on the holderof the employment by the duties of that employment.

To see whether an expense has been necessarily incurred you must find out what taskshave to be undertaken in order to carry out the duties of the job, see EIM31635. An expense is only necessary if each and every holder ofthat employment would have to incur expenditure of that type.

Once again, just as for EIM31642 this test relates to the natureof the expense and not to the amount. For example, a business trip may be made bytrain, car or bus. As long as the trip is necessary it does not matter that the variousmodes of transport have different costs. If the journey is necessary you should notattempt to restrict the deduction to the minimum cost that could have been incurred.

The case of White v Higginbottom (57TC283) provides a useful example of the practicaloperation of the “necessary” test, albeit in relation to the similar rulerelating to capital allowances, see EIM36550.

The effect of this rule is illustrated by example EIM31648.