EIM00630 - Employment income: earnings from employment: sums paid under the terms of a contract of employment

Section 62 ITEPA 2003

A payment made under the terms of a contract of employment is taxable as earnings within Section 62 ITEPA 2003 if it is part of the remuneration for the employee바카라 사이트™s services. This is so even if the contract describes the payment as something else. For example, a contractual termination payment may be mistakenly described as compensation for loss of office. Such a payment is nevertheless taxable in full as earnings within Section 62 (see EIM00510).

You may have to look beyond the bare contract of employment to decide if a payment is contractual. Additional terms and conditions may be found in such things as staff hand books and wage negotiation agreements. In the case of a director with no written service agreement, you may have to look at the company바카라 사이트™s articles of association to find out what is due.

Decided cases that illustrate that a sum payable under a contract of employment is taxable as earnings include:

  • Henry v Foster (16TC605), see example EIM00635
  • Allen v Trehearne (22TC15)
  • Dale v De Soissons (32TC118)
  • Williams v Simmons (55TC17).

Payments made under the terms of a contract of employment must be distinguished from payments that are made because the contract is cancelled altogether. See 바카라 사이트˜Compensation for loss of office바카라 사이트™ at EIM02100.

As regards payments made as a result of the termination of an employment due to the death or disability of an employee, see EIM13600.

Note that a genuine redundancy payment, whether contractual or not, does not count as earnings within Section 62 (see EIM13750).