EIM42271 - Employment income: basis of assessment for general earnings: the time when earnings are received: actual payment: example of a case where income is paid to a third party
Rule 1, Sections 18(1) and 686(1) ITEPA 2003
Example 1
An employee is awarded a bonus of £1,000 for the year ended 31 March 2005, payable on 30 April 2005. »Ê¹ÚÌåÓýapp employee asks the employer to pay the £1,000 to a specified charity and the employer does so on the payment date. This is simply an application of the employee’s own remuneration, so the £1,000 is chargeable on the employee in 2005/06 and the employer must operate PAYE at the time of payment.
»Ê¹ÚÌåÓýapp position would be the same if, for example, the employee asked the employer to pay the money to a building society to pay off part of the employee’s mortgage - if an employee is entitled to receive money, and that money is redirected to a third party, PAYE must still be operated as if the money was paid directly to the employee.
Example 2
An employee gets into financial difficulty and the employer decides to help out the employee by paying their domestic gas and electricity bills. »Ê¹ÚÌåÓýapp employer does not expect repayment, so the payments are not a loan.
»Ê¹ÚÌåÓýapp payment is not paid out of remuneration due to the employee, so it is not an application or redirection of the employee’s remuneration. »Ê¹ÚÌåÓýapp employer does not need to operate PAYE on the payment.
»Ê¹ÚÌåÓýapp item should be shown on form P9D (for 2015/16 and earlier) or P11D as appropriate (see EIM00590).