EIM00620 - Employment income: earnings from employment: lump sum payments: general

Section 62 ITEPA 2003

An Inspector must deal with any case where there is any doubt or dispute about whether a particular receipt is taxable as earnings within Section 62 ITEPA 2003.

It is mainly when non-recurring or voluntary money payments are received by an employee, or former employee, that you will have to consider the main principles set out at EIM00510 to EIM00610. They are sometimes referred to as lump sum payments.

The correct tax treatment can only be decided after all the facts have been obtained. This often means getting copies of relevant correspondence and documents, and interviewing the payer and recipient. Factual matters not detailed in correspondence can often be crucial. Remember too that the description of a payment may be misleading. It may be described as a gift or compensation but may still be taxable as earnings because it is from the employment.

The following table shows you where to find guidance on the treatment of particular types of lump sum payment. In each case, the question is whether the payment comes from the office or employment. In cases of doubt or difficulty, do not forget to consider the general guidance on the point at EIM00600 onwards.