Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 310: Counselling and other outplacement services
1286.This section provides there is no liability to income tax on the provision of counselling and other services in connection with the cessation of a person’s employment.
1287.It derives from sections 589A and 589B of ICTA as they apply to an employee. The provisions of 589A and 589B as they apply to an employer do not change, except that they have been amended to reflect the minor changes to the law made in this section. See paragraph 69 of Schedule 6.
1288.Subsection (1) provides the exemption and the conditions to be satisfied.
1289.Subsection (2) sets out condition A, which relates to the purpose of the provision of the services.
1290.Subsection (3) sets out condition B, which relates to the services provided.
1291.Subsection (4) sets out condition C, which relates to the qualifying two year period of continuous employment.
1292.Under the Employment Rights Act 1996, some events that involve a change in the identity of the employer are treated as not breaking the continuity of employment. The two year requirement is therefore expressed in terms of the employment that is ceasing, not of employment by the employer. See Change 71 in Annex 1.
1293.Subsection (5) sets out condition D, which relates to the availability of the services to employees generally.
1294.Subsection (6) sets out condition E, which relates to travel expenses.
1295.Travel expenses meeting condition E include expenses that, on the assumptions in subsection (7), would be deductible under any provision of Part 5. Under ICTA, expenses within the exemption are restricted to expenses deductible only under selected sections of those rewritten in that Part. See Change 73 in Annex 1.
1296.This section is listed in section 332 (meaning of “the deductibility provisions”). Various provisions in Part 5 then ensure that certain rules in Part 5 do not adversely restrict expenses, deductible under that Part, for the purposes of condition E.
1297.Subsection (7) sets out the assumptions made in applying condition E to travelling expenses. To accord with Inland Revenue practice, one of those assumptions is that the expenses are incurred and paid by the employee. But the assumption that they are paid out of emoluments has not been rewritten. See Change 81 in Annex 1.
1298.To accord with Inland Revenue practice, the section omits the condition in section 589B(2)(e) of ICTA, that the services are provided in the United Kingdom, and the apportionment rule in section 589B(3) which applies if services are provided partly in and partly outside the United Kingdom. A similar condition, in section 589(1)(d) of ICTA, has been omitted from section 311 for the same reason. Removal of this condition aligns sections 310 and 311 with the exemptions in Chapter 4 of Part 4. See Change 72 in Annex 1.