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Sections 15(2) and 18 ITEPA 2003 and section 43 FA 1989

For an overview of waivers of remuneration, see EIM42705.

A waiver can be of fees and bonuses as well as salary.

»Ê¹ÚÌåÓýapp crucial factor for tax purposes is whether the remuneration waived is given up before it is treated as received for employment income purposes. Once a director or employee is treated as having received money earnings (see EIM42260 onwards):

• PAYE is deductible
• they are taxable earnings of the employee and
• the employer is entitled to a deduction for them in computing the profits of its business

A subsequent waiver of remuneration will neither reduce the amount of remuneration subject to PAYE nor the amount of taxable earnings. For more detail on this point, see EIM42715.

»Ê¹ÚÌåÓýapp link established by Finance Act 1989 between the time when employers can obtain a deduction for earnings in computing their business profits and the deduction of PAYE from them, should result in companies not voting remuneration that they are unable to pay.