EIM31655 - The general rule for employees’ expenses: deductions not to exceed earnings

A deduction under the general rule for employees’ expenses in Section 336 ITEPA 2003 can only be made where an actual expense has been incurred and paid.

Even where an expense has been paid that meets the conditions for a deduction under the general rule for employees’ expenses, the amount of the deduction is limited to the amount of the earnings from which it is to be deducted. It is not possible for Section 336 to create an allowable loss that could be relieved under Section 380 ICTA 1988. Similarly it is not possible for any surplus expenses to be deducted from any other income, including income from other employments.

The effect of this rule is illustrated by the example EIM31658.