SE42270 - Emoluments from offices and employments: basis of assessment - the time when an emolument is received - actual payment

Sections 202B(1)(a) and 203A(1)(a) ICTA 1988

An emolument is treated as received when it is actually paid or when a payment on account of it is made. For payments on account, see SE42280.

Actual payment happens when the income comes into the control of the employee so that they are able to deal with it for their own use and benefit.

All the following count as actual payment for the purposes of assessment under Schedule E, and the operation of PAYE:

• handing over cash or a cheque. In law payment by cheque is made when the employer posts it or hands it over to the employee. The date the cheque is cashed or put into the bank does not matter
• a credit transfer to a bank or building society account
• crediting an account in the employer's books on which the employee is free to draw at will (Garforth v Newsmith Stainless Ltd 52TC522). For directors only, there is an additional rule which disregards any restriction on the directors ability to draw money from the account (see SE42310)
• paying the income to a third party or using it in some way at the employee's discretion or with his consent to a purpose of his choosing. This does not mean that PAYE is due on all “pecuniary liability” payments (see SE00580). PAYE will only be due if what is paid out is income which is due to the employee, but which the employee directs to be applied in a way of his or her choice (see example SE42271).