The remuneration of a sub-postmaster is in law chargeable as
employment income. Where, however, a retail trade or business
within the scope of Case I of Schedule D is carried on from the
same premises as the sub-post office, the remuneration as
sub-postmaster may in practice be included with the trade receipts
and accordingly assessed under Schedule D. Where this is done, the
Inspector dealing with the Schedule D accounts should ask the PAYE
office to issue code NT for the salary. The accounts file should be
noted accordingly, to make sure the salary is taxed as part of the
trade receipts. Where no trade is carried on, or the trade is
negligible, the remuneration as sub-postmaster should be charged as
employment income.
Where a sub-postmaster also carrying on a trade requests the
statutory basis of assessment for both sources of income, the trade
profits should be assessed under Schedule D and the remuneration as
sub-postmaster charged as employment income. In such a case, the
expenses allowed in the Schedule D assessment on the trade profits
should exclude any expenses which relate to the sub-postmaster's
employment income; any necessary adjustments should, however, be
made on broad lines.
Where a retail trade or business is carried on by a company
from the same premises as a sub- post office, the Post Office
salary is the income of the sub-postmaster and not of the company.
In practice, however, no objection should be raised to a request to
treat the Post Office salary as income of the company provided that
the sub-postmaster is required to, and does, hand over his
remuneration to the company.
The practice of treating the remuneration of a sub-postmaster
as a trade receipt of an individual or a company applies for tax
purposes only. Class 1 National Insurance Contributions remain
payable in respect of the Post Office salary. The amount to be
included in computing the trading profits is the gross remuneration
before deduction of National Insurance Contributions. National
Insurance Contributions are not an allowable deduction either from
employment income or from the receipts of the trade.
As regards termination payments received by a sub-postmaster
on ceasing to hold office, see EIM68228.
