Income Tax (Earnings and Pensions) Act 2003 section 557

Deductible payments wholly or partly borne by the former employer etc.

Section 557 deals with how to determine the amount of any deduction available to a former employee where the former employer or an insurance contract has covered some or all of the cost of a deductible payment.

• The section applies where a former employee makes a deductible payment personally, but the cost is wholly or partly borne by the former employer or met from insurance proceeds.
• The portion of the cost borne by the former employer or insurance (the "relevant amount") cannot normally be deducted under section 555.
• An exception applies where the relevant amount has been taxed as a relevant retirement benefit or as post-employment earnings of the former employee.
• Where the relevant amount has been so taxed, a deduction for that amount is permitted under section 555, preventing a double tax charge.

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