Part 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) allows for certain deductions to be made from taxable pay. – i.e. to reach a figure called net taxable pay which is the pay on which Income Tax is calculated. The way in which tax relief is claimed depends on whether the amount is up to or over £2,500 over the course of the tax year.

Sections 343 and 344 of ITEPA allow for professional membership fees and annual subscriptions to be provided free of tax and National Insurance where:

  • It is paid to a body that has HMRC approval, and
  • The activities of the body are of direct benefit to or concern the profession practiced in the performance of the duties of the employment

The full list of professional bodies that have the necessary HMRC approval is published in a document known as ‘List 3’.  List 3 is essential reading for the reward professional, as the day-to-day professional impact of a body appearing on it are that:

  • Employers can reimburse fees and subscriptions without fear there will be a P11D implication and / or
  • Individuals can claim tax relief on the fee or subscription that they have paid (assuming that the employer has not actually reimbursed the fee or subscription)

The List was updated on 31 December 2019 with the simple comment:

The Energy Institute has been removed.

I assume that this is from tax year 2019/20, though it does not say so.  I also question whether it is correct that there has been only one addition to the list published on 02 December 2019.  You have to go back to June 2018 for the last time only one change was made to List 3.  I hope that we can rely on this update from HMRC.

List 3 is an essential document for payroll / reward professionals.  It is absolutely vital that we are provided with accurate and complete information to be able to correctly reimburse fees and subscriptions in the knowledge that there will be no P11D implication.  The same applies for individuals who are looking to claim tax relief.

It is not acceptable that we have to make an assumption that the removal of The Energy Institute is from tax year 2019/20.  It is also unacceptable that we still do not have the details of the 4 additions, 3 amendments and 1 deletion made to the List when it was updated on 02 December 2019.

In that regard, I am still trying to ascertain these details and was assured by HMRC on 17 December 2019 that they were still dealing with my enquiry ‘and awaiting further information from the appropriate business area’.

Let‘s hope that 2020 brings with it improved communication from HMRC and/or Gov.UK.  Through no fault of our own, we are being placed in a very awkward situation that makes the accurate operation of legislation very difficult indeed.

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