Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 311: Retraining courses
1299.This section provides there is no liability to income tax on payment or reimbursement of retraining course expenses when a person’s employment has ceased or is expected to cease.
1300.It derives from sections 588 and 589 of ICTA as they apply to an employee. The provisions of 588 and 589 as they apply to an employer do not change, other than to adopt the minor changes to the law made in this section. See paragraph 67 of Schedule 6.
1301.Subsection (1) provides the exemption and the conditions to be satisfied.
1302.Subsection (2) defines “retraining course expenses” for the purposes of the exemption.
1303.Subsection (3) sets out the course conditions.
1304.The section does not require a course to be undertaken “with a view to retraining the employee”. In practice a course is regarded as so undertaken if the conditions in the section are satisfied. This additional requirement is superfluous. See Change 74 in Annex 1.
1305.To accord with Inland Revenue practice, the section also omits the condition in section 589(1)(d) of ICTA, that all teaching and practical application forming part of the course takes place in the United Kingdom. A similar condition, in section 589B(2)(e) of ICTA, has been omitted from section 310 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.
1306.Subsection (4) sets out the employment conditions.
1307.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 requirement that the employee be employed continuously for two years prior to retraining or, if earlier, when the employment ceased, is therefore expressed, as in section 310(4), in terms of the employment that is ceasing, not of employment by the employer.
1308.Expressing the requirement this way aligns sections 310 and 311 in their treatment of the same requirement. See Change 71 in Annex 1.
1309.Subsection (5) sets out the conditions that relate to travelling expenses.
1310.As in section 310, travel expenses meeting this condition include expenses that, on the assumptions in subsection (6), 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.
1311.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 subsection (5).
1312.Subsection (6) sets out the assumptions made in applying the condition in subsection (5) to travelling expenses. To accord with Inland Revenue practice, one of those assumptions is (as in section 310) 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.