NIM02010 - Class 1 NICs : Earnings of employees and office holders : Meaning of "earnings"

Section 3 Social Security Contributions and Benefits Act 1992

Section 3(1) of the Social Security Contributions and Benefits Act 1992 provides that 바카라 사이트渆arnings바카라 사이트� includes 바카라 사이트渁ny remuneration or profit derived from an employment바카라 사이트�. Remuneration includes salaries, wages, and other forms of reward such as bonuses, commission, tips, etc.

In order to be earnings, therefore, a payment must:

  • constitute salary or other personal benefit or gain to the employee, and
  • be derived from the employment.

The meaning of 바카라 사이트渆arnings바카라 사이트erived from an employment바카라 사이트� has not been specifically tested before the General or Special Commissioners or in the courts, but on several occasions it has been held that in order to determine whether or not something constitutes 바카라 사이트渆arnings바카라 사이트� for the purpose of NICs, we can look towards the principles established for income tax purposes with regard to 바카라 사이트渆moluments바카라 사이트�.

We regard the meaning of 바카라 사이트渆arnings바카라 사이트� and 바카라 사이트渆moluments바카라 사이트� as broadly similar.

In April 2003, The Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) replaced all of the existing Schedule E legislation within the Income and Corporation Taxes Act 1988 (ICTA 1988), including the word 바카라 사이트渆molument바카라 사이트�. Rather than imposing a charge to tax on emoluments and/or treated emoluments, ITEPA 2003 imposes a charge to tax on 바카라 사이트渆mployment income바카라 사이트�. Employment income consists of both:

  • general earnings (which, in large part, represents what was formerly referred to as 바카라 사이트榚moluments바카라 사이트� and/or 바카라 사이트榯reated emoluments바카라 사이트�) and
  • specific employment income.

Although ITEPA 2003 presents tax law in a clearer language, it broadly retains the effect of the Schedule E legislation. This means that principles established in tax caselaw, including those relating to the meaning of the term emolument, remain valid.

The leading tax cases are:

  • Hochstrasser v Mayes (38TC707)
  • Shilton v Wilmshurst (64TC78)
  • Laidler v Perry (42TC351)
  • Hamblett v Godfrey (1987) STC60.

See EIM00700 and EIM00750 and EIM00690 for information with regard to the decisions in these cases.

See also EIM00530 for guidance regarding the money바카라 사이트檚 worth principle and EIM00580 for an explanation of the pecuniary liability principle.