Commentary on Sections Example 3 Ne = £5,000; Da = 183; De = 183; Smg = 0 Section 353: Deductions from earnings charged on remittance
1529.This section deals with deductions from earnings charged on remittance, an expression defined in section 335(4).
1530.The section derives from section 198(3) of ICTA.
1531.Subsection (1) provides for a deduction to be allowed from earnings charged on remittance for expenses within subsection (2) if the condition in subsection (3) is met.
1532.Subsection (2) specifies the expenses to which this section applies. Paragraph (a) refers both to expenses paid by the employee out of the relevant earnings and to expenses paid on the employee’s behalf by another person and included in those earnings. This wording did not appear in the source legislation, but it corresponds to the wording used in section 333 (scope of this Chapter). See Note 36 in Annex 2.
1533.Subsection (3) states a condition that must be met before this section may operate: that the earnings would have been deductible under sections 336 to 342 if the earnings had been earnings charged on receipt in the tax year in which the expenses were incurred. (The expression “earnings charged on receipt” is defined in section 335(4)). The reference to “sections 336 to 342” derives from the reference to “subsection (1)” in section 198(3) of ICTA. Sections 341 and 342 do not derive directly from section 198(1) of ICTA, but these have been included in the new reference because the provisions from which they do derive (section 193(3) and (6) of ICTA) operate through section 198(1).
1534.Subsection (4), which is a drafting addition, deals with the relationship between this section and the deductibility provisions (listed in section 332). In the case of deductions under this section the requirement for payment out of earnings has survived, so it is provided that, for the purposes of the deductibility provisions, the expenses are to be assumed to have been paid out of the earnings charged on remittance. See Change 81 in Annex 1.