An employer may alter the duties an employee has to perform and
make a payment to the employee for accepting the change. Such a
payment is taxable as earnings within Section 62 ITEPA 2003. It is
referable to the employment and to nothing else. So it is from the
employment (see
EIM00600). It is similar to a sum paid
to an employee for continuing to serve in his employment (see
EIM00650).
Payments related to changes in duties are often made
following agreements with trade unions under which an employer
seeks to improve efficiency by redefining duties. Such payments are
taxable as earnings within Section 62, for the reasons given above.
The same rule applies to changes in other matters connected
only with the employment. For example, payments made to persuade
employees to change from being paid in cash to being paid by direct
credit to a bank account. Here again, the payment is referable to
the employment and nothing else.
Employers and employees may be reluctant to accept that such
change payments are from the employment, and thus taxable as
earnings within Section 62. In such a case, the Inspector could
point out that, if Section 62 did not apply, the payment would
nevertheless be treated as earnings under the benefits code (see
EIM20006 onwards). The benefits code
applies to cash payments as well as to benefits in kind (see
EIM21006). And a benefit provided by the
employee's employer is deemed to be provided by reason of the
employment (see
EIM20502).
Both Section 62 and Section 201 (the benefits code) take
precedence over any possible charge under Section 401 (see
EIM13000).
