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Operation of PAYE on payments made in respect of restrictive covenants

»Ê¹ÚÌåÓýapp employer should operate PAYE on a payment chargeable by virtue of Section 225 ITEPA 2003. If the employer fails to deduct tax under PAYE tax offices should treat that as a PAYE failure and take the appropriate action.

Payment to recipient who is not an “employee�

In certain circumstances a payment may be made by a person who is not the individual’s employer in the contractual sense. See example EIM03624. »Ê¹ÚÌåÓýapp PAYE regulations require the payer to deduct tax under PAYE at basic rate and pay it over to the collector.

»Ê¹ÚÌåÓýapp individual has the responsibility to return and self assess any higher rate liability.