Payment for loss of earnings

By Tolley in association with Philip Rutherford

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Payment for loss of earnings
  • Introduction
  • Loss of earnings


Employees may be paid by either their employer on behalf of a third party or by a third party directly for loss of their earnings. Examples of a loss of earnings might be instances in which an employee is required to attend jury service or trade union meetings. The tax treatment is determined on whether the amount is compensation based on the actual loss or whether there is further reward beyond the true loss to the employee. Prior to 6 April 2018, this treatment was based on an extra-statutory concession. From 6 April 2018, ITEPA 2003, s 299A specifically exempts voluntary office-holders receiving compensation for lost employment income from PAYE. This exemption covers office holdings within Government, local government, trade unions, local medical committees and other public bodies. ITTOIA 2005, s 782 exempts those in voluntary public service such as jurors.

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