What does section 347 of the Income Tax (Earnings and Pensions) Act 2003 do?

Section 347 restricts the employee liability deduction under section 346 to payments made while the employment is current. If an employee has already left the job, they cannot claim the section 346 deduction. Instead, former employees are directed to section 555 for alternative relief against net income.

Can a former employee claim a deduction for liability payments made after leaving employment?

Yes, but not under section 346. Former employees who make qualifying liability payments after leaving their employment must claim relief under section 555 of the Act. This allows the deduction to be taken when calculating net income rather than as a deduction against employment earnings from the former role.

What is the difference between section 346 and section 555 relief for employee liability payments?

Section 346 allows current employees to deduct qualifying liability payments directly from their employment earnings. Section 555 provides the same relief for former employees, but the deduction is applied against total net income instead. The timing of the payment relative to the end of employment determines which section applies.

Why does the timing of a liability payment matter under section 347?

The timing determines which relief mechanism applies. A payment made while still employed qualifies for deduction under section 346 against employment earnings. A payment made after leaving employment cannot use section 346 and must instead be claimed under section 555 against the former employee's net income.

Income Tax (Earnings and Pensions) Act 2003 section 347

Payments made after leaving the employment

Section 347 restricts the deduction for employee liabilities to payments made during the period of employment and signposts the alternative relief available for payments made after employment has ended.

A deduction under section 346 for employee liability payments is only available while the employment is current
If the employee has left the job and makes a payment after their leaving date, the section 346 deduction cannot be claimed
Former employees who make qualifying payments after leaving are directed to a separate relief under section 555
Section 555 allows former employees to claim the deduction against their net income rather than against employment earnings

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