Where employees contribute to a fund for the provision of sick
pay, the contributions do not attract tax relief and should be made
from income after the deduction of tax and NIC.
Payments made to employees when they are sick out of a fund
consisting entirely of employee contributions are not taxable as
employment income. But if they are annual payments a charge may
arise on Savings and Investment Income. The tax treatment of such
payments should be considered by reference to Sections 735 –
743 ITTOIA 2005 (see IPTM6100 and subsequent).
