Annex 1: Minor changes in the law made by the Act: Change 44: Ministers of religion: omission of section 332(3)(a) of ICTA: section 159
This change drops section 332(3)(a) of ICTA.
Section 332(3)(a) of ICTA allows deductions for “any sums of money paid or expenses incurred by [the minister] wholly, exclusively and necessarily in the performance of his duty as a clergyman or minister”. Those words are almost identical to the words of the employment income rule, in section 351 of ITEPA.
In practice, the Inland Revenue applies the more generous “wholly and exclusively” rule in section 74(1)(a) of ICTA in calculating the profits of a profession or vocation carried on by a minister of religion. This means that a deduction may be allowed for expenses that are not incurred necessarily or in the performance of the duties.
The change removes the more restrictive test for expenses and brings the statute into line with practice.
This change is in taxpayers' favour in principle. But it is expected to have no practical effect as it is in line with current practice.