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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Provisions of the benefits code not applicable to ministers of religion – overview

Section 13 Finance Act 2015 and Sections 290C and 290D ITEPA 2003

Section 13 FA 2015 abolished the exclusion for employees in lower-paid employment from parts of the benefits code with effect from the 2016/17 tax year. However, section 290C ITEPA 2003 introduced a new exclusion from certain chapters of the benefits code for a person who is in lower-paid employment as a minister of religion. The new exclusion took effect from the start of the 2016/17 tax year.

A minister of religion includes a minister of any faith, religion or denomination.

Where the exclusion applies, no liability to income tax arises for the minister of religion by virtue of any of the following Chapters of the benefits code:

  • Chapter 3 – expenses payment;
  • Chapter 6 – cars, vans and related benefits;
  • Chapter 7 – loans;
  • Chapter 10 – residual liability to charge.

The exclusion also retains the exemptions provided in sections 290A and 290B ITEPA 2003 for the reimbursement of accommodation costs, such as heat, light and water, and the payment of an allowance towards these costs (see EIM60015) for ministers in lower-paid employment. Similarly, there is no NIC liability in these circumstances.

A person is in a lower-paid employment as a minster of religion if he or she:

  • is directly employed as a minister of a religious denomination, and
  • has an earnings rate from that employment (calculated under section 290E of ITEPA 2003) of less than £8,500 for the tax year.