Payment for loss of earnings

Produced by Tolley in association with Paul Tew

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

  • Payment for loss of earnings
  • Introduction
  • Loss of earnings
  • No more than the employee would have received from their employer
  • More than the employee would have received from their employer
  • Self employed

Payment for loss of earnings

Introduction

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 depends on whether the amount is compensation based on the actual loss of employment income, or whether there is further reward beyond the true loss to the employee.

From 6 April 2018, ITEPA 2003, s 299A specifically exempts voluntary office-holders receiving compensation for lost employment income from PAYE. Prior to 6 Ap

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