The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Prior to the enactment of ITEPA 2003, employment income was known as ‘Schedule E’. You may hear this term used in practice.
To understand the taxation of employment income, it is important to appreciate how the legislation categorises the income.
Employment income can be subdivided into:
ITEPA 2003, s 6(1)
‘General earnings’ is essentially payments made to the employee or director as a reward for services rendered. General earnings is itself divided into:
ITEPA 2003, s 7(3)
Earnings, in relation to an employment, means:
ITEPA 2003, s 62(2), (3)
The case law interpretation of earnings is discussed further in EIM00610.
Any amount that is earnings for the purposes of ITEPA 2003, s 62 should have income tax and Class 1 national insurance withheld via PAYE, whether or not these amounts are paid via the payroll. However, there may be special rules in relation to tips and gratuities, see the Tips
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