Income Tax (Earnings and Pensions) Act 2003 section 333

Scope of this Chapter: expenses paid by the employee

Section 333 sets out the fundamental rule that expense deductions under this Chapter are only available where the amount has been paid by the employee, or paid on their behalf and included in their taxable earnings.

• An expense deduction is only allowed if the employee paid the amount themselves, or if someone else paid it on their behalf and it has been included in their taxable earnings.
• Where an employer or other party meets an expense on the employee's behalf, the employee is treated as having paid it, but only to the extent that the amount forms part of their earnings.
• Two exceptions exist: expenses of ministers of religion and deductions for corresponding payments by qualifying new resident employees with foreign employers — these are not subject to the "paid by or included in earnings" requirement.
• Where a benefit in kind (such as vouchers, living accommodation, or other taxable benefits) is provided instead of the employee paying the expense directly, a separate Chapter (Chapter 3) deals with allowing deductions for costs that would have been deductible had the employee paid them.

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