SE00520 - Emoluments of employees and office holders: meaning of 'emoluments'

Section 131(1) ICTA 1988

Section 19(1)1 ICTA 1988 charges tax on 'emoluments' from an office or employment. 'Emoluments' are defined in Section 131(1) as including 'all salaries, fees, wages, perquisites and profits whatsoever'.

This is a wide definition. The phrase 'profits whatsoever' ensures that all money payments which are similar to salaries, fees and wages are chargeable under Section 19(1)1. Examples are bonuses, commissions, overtime pay, tips, gratuities and extra money earnings of any kind.

But employees may receive a 'perquisite or profit' from their employment which does not take the form of money. A benefit in kind is an emolument within Section 131(1) if:

• it is received in kind and can be converted into money. This is called the money’s worth principle (see SE00530), or
• it takes the form of a payment to a third party to meet an employee’s obligation to pay for something. This is called the pecuniary liability principle (see SE00580). An example of this is where the employer pays an employee’s rent direct to the landlord.

Other benefits in kind may be the subject of special legislation deeming them to be emoluments, or directing that they are charged under Schedule E. There is a list of these special provisions at (see SE00595).