By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services
The Income Tax (Earnings and Pensions) Act 2003 (sections 343 and 344) allows for professional membership fees and annual (not lifetime) subscriptions to enjoy a tax deduction where:
• It is paid to a professional body that is approved by HMRC and
• The subscription/fee benefits or is necessary for the better performance of duties of employment.
The term “tax deduction” actually applies in two different ways:
• If the employer has paid or reimbursed them, there is no tax obligation for them to be reported as a benefit or processed as earnings.
• If the employee has paid them (and has not reclaimed them), tax relief can be claimed, often via self-assessment.
If the deduction exists for tax, corresponding legislation also ensures that relief applies for National Insurance contributions.
In respect of the professional bodies approved by HMRC, these are advised via their List 3 document. This has recently been updated and is current as at 28 February 2017.
Professional organisations that are not on List 3 can apply for approval for tax relief using form P356.
Posted on 15th March 2017 by Jerome Smail
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