Who qualifies for the coal and fuel exemption under section 306 of the Income Tax (Earnings and Pensions) Act 2003?

The exemption applies to colliery workers, defined as coal miners or other persons employed at or about a colliery. However, those engaged in clerical, administrative, or technical roles are excluded. The exemption covers free coal, smokeless fuel, or cash allowances paid in lieu, provided they do not substantially exceed reasonable personal use.

What is the personal use condition for the section 306 coal exemption?

The amount of coal, smokeless fuel, or cash allowance must not substantially exceed what is reasonably required for the worker's personal use. Importantly, legislation provides a helpful presumption: the condition is assumed to be satisfied unless HMRC can demonstrate otherwise, so the burden of proof rests with HMRC.

What was the origin of the section 306 exemption for miners' coal?

Section 306 was originally an extra-statutory concession known as ESC A6. It was later written into statute as part of the Income Tax (Earnings and Pensions) Act 2003. In practice, no one who previously benefited from the concession was expected to lose out under this statutory provision.

Does a colliery administrative worker qualify for the free coal tax exemption?

No. The definition of a colliery worker for section 306 purposes specifically excludes those employed in clerical, administrative, or technical roles. An administrative employee receiving free coal from a colliery employer would be subject to income tax on its value as a benefit in kind.

Income Tax (Earnings and Pensions) Act 2003 section 306

Miners etc.: coal and allowances in lieu of coal

Section 306 provides an exemption from income tax for free coal, smokeless fuel, or cash allowances paid in lieu of such provision to colliery workers, subject to a personal use limit.

Colliery workers pay no income tax on coal, smokeless fuel, or cash allowances received in lieu of such provision
The exemption is limited to amounts not substantially exceeding what is reasonably required for the worker's personal use
The personal use condition is assumed to be met unless HMRC can demonstrate otherwise
A colliery worker is defined as a coal miner or other person employed at or about a colliery, excluding those in clerical, administrative, or technical roles

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