Income Tax (Earnings and Pensions) Act 2003 section 39

Earnings charged on remittance

Section 39 of Schedule 7 provides a transitional rule for how expense deductions are treated when earnings are taxed on the remittance basis, specifically for expenses incurred before the 2003-04 tax year.

• This paragraph applies to expenses incurred before the 2003-04 tax year where earnings are taxed on the remittance basis.
• It modifies the condition in section 353 so that the older ICTA rules (sections 193, 194, 195 and 198(1)) are used to test whether expenses qualify for deduction.
• The expenses must be ones that would have been deductible from the employment income had that income been taxable under the old Case I of Schedule E.
• The relevant tax year for testing deductibility is the year in which the expenses were actually incurred, not the year in which the earnings are remitted.