PSI2.1.11 - Taxation Background: General – Schedule E - Basis of Assessment

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

From 6 April 1989 directors and other employees are assessed to Schedule E tax on their emoluments (excluding pensions and State benefits whose basis for assessment remained unaltered) on the receipts basis under which the assessment is made on the actual earnings received in the tax year in question. (The previous statutory basis of assessment, which applied for years prior to 6 April 1989 (1988/89 and earlier), was the amount of the emoluments for the year of assessment (section 19(1) ICTA 88). This was known as the earnings or apportionment basis but in practice applied only in limited circumstances. An alternative basis was the accounts basis. This was usually adopted where employees' salaries as well as their profit commission were calculated by reference to the employer's accounting year.)