Income Tax (Earnings and Pensions) Act 2003 section 11

Calculation of "net taxable earnings"

Section 11 explains how to calculate net taxable earnings from an employment for a tax year, using a simple formula of taxable earnings minus allowable deductions.

• Net taxable earnings are calculated as total taxable earnings (TE) minus total allowable deductions (DE) for each employment in the tax year
• Allowable deductions are those listed in section 327(3) to (5), which provides a comprehensive catalogue of all deductions that may be set against earnings
• If the result of the calculation is negative, net taxable earnings are treated as nil, although loss relief may be available under section 128 of ITA 2007 in limited circumstances
• Where a person holds more than one employment in a tax year, the calculation must be performed separately for each employment — deductions relating to one job cannot be offset against earnings from another