SE42290 - Emoluments from offices and employments: basis of assessment - the time when an emolument is received - entitlement to payment of emoluments

Sections 202B(1)(b) and 202A(1)(b) ICTA 1988

An emolument is treated as received when a person becomes entitled to payment of it or on account of it.

• For employees, the terms of service agreed by the employer and employee will tell you when an employee is entitled to be paid emoluments.
• For directors, see SE42300.

Note that the rule is when a person becomes entitled to payment of emoluments. This is not necessarily the same as the date on which an employee acquires a right to be paid. For example, an employee's terms of service may provide for the employee to receive a bonus for the year to 31 December 2000, payable on 30 June 2001 if the employee is still in the service of the employer on 31 December 2000. If the condition is satisfied the employee becomes entitled to a payment on 31 December 2000 but is only entitled to payment of it on 30 June 2001. So PAYE applies to it on 30 June 2001 and it is assessable for 2001/02. The date which matters is the date the employee is entitled to be paid the bonus.

It can happen that payment is actually made after the date the employee is entitled to be paid. For example, to help out a hard-pressed employer employees may agree not to draw their pay. In that situation they are deemed to have been paid on the day they were entitled to be paid.