Chapter 21 - Expenses of Employment Flashcards
Name the 5 categories of allowable deductions
a. Expenses deductible under ITEPA 2003
b. Travel expenses
c. Payments made by an employee to an occupational pension
d. professional fees
e. Donations made to charity
What are the two criteria a deduction has to meet to be allowable?
a. the employee is obliged to incur and pay the expense
b. the amount is incurred ‘wholly, exclusively & necessarily’ in the performance of duties
What is the question HMRC would ask to determine if an expense is necessary?
Could the employee do their job without incurring that particular expense?
What two criteria do travel expenses have to meet to be allowable?
a. necessarily incurred on travelling in the performance of the duties of the employment
b. attributable to the employee’s necessary attendance at any place in the performance of the duties
Define ‘ordinary commuting’
Travel been either -
a. the employee’s home & permanent workplace
or
b. a place that is not a workplace & a permanent workplace
Is office-to-client travel allowable?
Yes
Define ‘temporary workplace’
A place which the employee attends in the performance of their duties in order to perform a task of limited duration or for another temporary purpose
True or false
The cost of business travel does not include subsistence costs attributable to the journey in question
False
In what circumstance is a deduction from taxable earnings for a professional fee allowable?
Where the employment involves the practice of the profession to which the fee relates & the payment of the fee is a condition which must be met
True or false
A deduction from taxable earnings is allowed for annual subscriptions
True
Provided the subscription is for an approved body
Give an example of an approved body for an annual subscription
CIOT
How are charity donations treated under GAYE?
Donations are made gross & is deducted from the taxable earnings for the year
True or false
An employee will only claim relief where they have personally incurred an allowable expense and not been reimbursed by the employer
True
What is a round sum allowance?
A general allowance (usually a fixed amount of cash) paid to the employee in advance to cover their expenses for a period
