Annex 1: Minor changes in the law made by the Act: Change 16: Clarification of position of employees seconded to charities: section 70
This change provides that a trader who seconds an employee to a charity or educational establishment is entitled to a deduction in calculating the trade profits, irrespective of the duties undertaken by the employee while on secondment.
Section 86 of ICTA gives relief for employers who second employees to charities or educational establishments. It does this by providing that, notwithstanding anything in the general rules on deductions not allowable in section 74 of ICTA, the cost of the seconded employee:
“shall continue to be deductible in the manner and to the like extent as if, during the time that his services are so made available…they continued to be available for the purposes of the employer’s trade…”
So if the costs of the employee would not be allowed under the normal rules – for example because the employee is employed on a capital project – the employer is not entitled to any deduction under section 86 of ICTA.
In practice, the costs of the secondment are allowed whatever the nature of the work carried out by the employee during the secondment. So if, for example, an employee is seconded to a medical charity to help build a hospice, the employer is allowed to deduct the cost of employing the seconded person. This change gives statutory effect to that 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.