EIM00750 - Employment income: earnings from employment: compensation from a source other than the employment

Section 62 ITEPA 2003

To be taxable as earnings within Section 62 ITEPA 2003 a payment must come from the employment (see EIM00600).

Sometimes an employee will receive a payment that they would not have received but for the fact that they are an employee. That on its own is not sufficient to make the payment taxable as earnings within Section 62. Lord Woolf, in Mairs v Haughey (66TC273) explained that the authorities had consistently held that a sum paid to relieve distress is not earnings. Additionally there may be separate consideration for the payment showing that the payment does not arise from the employment (see EIM00710).

In Hochstrasser v Mayes (38TC673) an employee received the difference between the purchase and sale price of his house. The payment was made under the employer바카라 사이트檚 housing scheme relating to employees transferred from one part of the country to another. Under the scheme a transferred employee was reimbursed any loss he sustained on selling his house but he had first of all to offer to sell the house to his employer at market value. It was held that the payment was not a profit from the employment.

The source of the payment was the housing scheme not the employment. In Laidler v Perry (42TC351), Lord Hodson said at page 366 that the decision in Hochstrasser v Mayes:

바카라 사이트�바카라 사이트epended on its own peculiar facts, there being a collateral agreement between employer and employee quite outside their contracts of service to compensate the employees for any loss they might incur on selling their houses on transfer from one part to another.바카라 사이트�

In the High Court in Hochstrasser v Mayes, Upjohn J said that to be a profit from the employment a payment 바카라 사이트渕ust be in the nature of a reward for services past, present or future바카라 사이트�. Decisions in later cases have shown the words 바카라 사이트渞eward for services바카라 사이트� should not be taken literally. In Bray v Best (61TC704) Lord Oliver said:

바카라 사이트淚 cannot read the phrase 바카라 사이트榬eward for services바카라 사이트� as anything more than a conventional expression of the notion that a particular payment arises from the existence of the employer-employee relationship and not, to use Lord Reid바카라 사이트檚 words in Laidler v Perry (42TC351), from 바카라 사이트榮omething else바카라 사이트�.바카라 사이트� (page 752)

Other decided cases that demonstrate that taxable earnings do not have to be remuneration or reward for services include Brumby v Milner (51TC583) (see EIM00740) and Hamblett v Godfrey (59TC694) (see EIM00690).