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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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The general rule for employees expenses: wholly and exclusively: expenditure with only incidental personal consequences


The whole of an expense is deductible where any personal or private consequences are purely incidental.

This can be illustrated by the case of Elwood v Utitz (42TC482). A Northern Ireland company director frequently needed to visit London on business. In order to obtain cheaper accommodation on business trips he subscribed to a London club. This brought the use of other facilities, such as a swimming pool and squash court but Mr Utitz did not use these facilities and only paid the subscription to get accommodation. The Courts held that these other benefits were purely incidental to the true business purpose and allowed adeduction.

The circumstances of the case are very unusual and you should be careful about how this principle is applied. The case can be contrasted with Brown v Bullock (40TC1) in which abank manager was refused a deduction for a club subscription that was incurred to make social contacts and to keep in touch with other club members who were customers of the bank. In that case the benefits of the club subscription were not incidental to the performance of the duties of the employment but were the whole purpose of the expenditure.

In the case of Baird v Williams (71TC390) the Court was not prepared to accept that the benefit to the taxpayer of mortgage interest payments was merely incidental to a business purpose. Payment of interest involved a “predictable benefit” to the taxpaye rand was not a “mere incidental and unavoidable benefit”. This illustrates the reluctance of the Courts to broaden the principle established in Elwood v Utitz.