CAT / FIA FTX Syllabus C. Income Tax Liabilities - Allowable deductions - Notes ^{3 / 15}

Total employment income calculation:

Allowable deductions:

1. Contributions to an occupational pension scheme. 

   Note that Payments to a personal pension scheme are NOT allowable deductions.

   More in Topic: Pensions.

2. Travel, subsistence and entertaining incurred wholly, exclusively and necessarily in the performance of duties of employment

3. Subscription to a professional body (e.g.) ACCA

   Note that payments for gym memberships are NOT allowable deductions.

4. Deficit on a mileage allowance Topic: The authorised mileage allowances

5. Donations to charity

   Note that Donations to political parties are not allowable deductions.

6. Capital allowances are available for plant and machinery provided by an employee for use in his duties Topic: Capital allowances

Illustration

Paresh had a salary of £30,000.

He paid £500 for his ACCA subscription.

He also paid £1,000 for travel to Scotland for business purposes entirely.

Finally, he paid £1,000 into a charity under a payroll deduction scheme.

What will his employment income be?

Solution

Salary £30,000

Less:
ACCA subscription (£500)
Business travel expense (£1,000)
Gift aid donation (£1,000)

Employment income £27,500