EIM01450 - Employment income: gifts and other voluntary payments
Section 62 ITEPA 2003
A gift in cash or a gift with a money’s worth (
EIM00530), or other voluntary payment to
an employee, counts as earnings within Section 62 ITEPA 2003 when
it arises from the employment (see
EIM00600 and
EIM00610). If the gift is in the form of
goods or services that have no money’s worth, it is not
taxable as earnings under Section 62 but it may be taxable under
the benefits code (
EIM20006). But it may be exempt from tax
under Section 324 if it is a gift of goods or services, (or a
voucher or token only capable of being used to obtain goods) made
by someone other than the employer (see
EIM21715).
Four cases illustrate the type of situation where gifts can
be chargeable.
In
Herbert v McQuade (4TC489) a clergyman received a
grant from a fund set up to augment the income of poorly paid
incumbents. Those making the grant took into account the duties,
incomings and outgoings of the benefice - not the personal
circumstances of the particular clergyman. It was held to be a
chargeable emolument. Stirling LJ said
'... a profit accrues by reason of an office when it comes to the holder of the office as such - in that capacity - and without the fulfilment of any further or other condition on his part'. (page 501)
In Cooper v Blakiston (5TC347) a vicar was given the collections made in his church on Easter Sunday - the longstanding practice in the Church of England. These 'Easter offerings' were held to be chargeable emoluments. The Lord Chancellor said
'Where a sum of money is given to an incumbent substantially in respect of his services as incumbent, it accrues to him by reason of his office. Here the sum of money was given in respect of those services. Had it been a gift of an exceptional kind, such as a testimonial, or a contribution for a specific purpose, as to provide for a holiday, or a subscription peculiarly due to the personal qualities of the particular clergyman, it might not have been a voluntary payment for services, but a mere present' (page 355).
In
Denny v Reed (18TC254) the managing clerk of a
firm of stockbrokers had a fixed annual salary but received
additional sums after the end of the firm's financial year at the
sole discretion of the partners. There was no evidence the payments
were made in respect of anything other than the work done for the
firm and they were held to be chargeable emoluments.
In
Moorhouse v Dooland (36TC1) a cricketer was
entitled to have collections made from spectators for meritorious
performance with bat or ball. The collections he received were held
to be chargeable emoluments. He was only receiving what he was
entitled to under his contract (see
EIM00610).
As regards:
