Income Tax (Earnings and Pensions) Act 2003 section 290E

Calculation of earnings rate for a tax year

Section 290E sets out the method for calculating the annual earnings rate for a minister of religion's employment, which determines whether the minister qualifies as lower-paid (earning at a rate of less than £8,500 in the tax year).

• Total up all earnings from the employment, including amounts treated as earnings under the benefits code and other provisions, but exclude exempt income other than exempt accommodation outgoings under sections 290A and 290B.
• Add any extra amount required in connection with a car (as specified by section 290F), then subtract authorised deductions such as employee liabilities, certain travel costs, payroll giving to charities, pension contributions, and capital allowances.
• If the employment is held for only part of the year, gross the result up to a full-year equivalent by multiplying by the ratio of total days in the year to the number of days the employment was actually held.
• For the purposes of this calculation, assume the employment is not lower-paid so that all benefits in kind are included, and calculate any living accommodation benefit under section 105 regardless of whether its cost exceeds £75,000.

---