Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 228: Effect of exemptions on liability under provisions outside Part 2
919.All of the exemptions in this Part operate to remove a charge to tax under Part 2 of this Act. Subsection (1) sets out the proposition that, in general, this is the only kind of charge to tax that these exemptions affect.
920.However, Part 4 includes a number of exemptions that have a wider effect. There are various phrases used in the exemption provisions in ICTA which make it clear that they operate to remove any charge to income tax. Examples are:
…shall not be regarded as income for any purpose of the Income Tax Acts – section 200(1) (expenses of Members of Parliament)
…shall be exempt from income tax – section 322(2) (consular officers and employees)
921.Some of the exemptions set out in ESCs are also worded so that they remove any charge to income tax on the income in question. Examples are:-
Income tax is not charged on…. – ESC A6 (Miners: free coal and allowances in lieu)
…the employee will not be charged to income tax….. – ESC A66 (Payments for employees’ journeys home: late night travel and breakdown in car-sharing arrangements).
922.Subsection (2) includes a list of all the exemptions in Part 4 that have this wider application and provides that they have effect to remove any charge to income tax.
923.The move to a common formulation, “no liability to income tax arises”, for all exemptions, including those listed in section 228(2), is explained in detail in Note 28 in Annex 2.