SE42310 - Emoluments from offices and employments: basis of assessment - the time when an emolument is received - crediting of emoluments in the accounts or records of the company

Section 202B(1)(c) and (4)-(6) and Section 203A(1)(c) ICTA 1988

For all employees and office holders, the crediting of remuneration to an account in the employer’s books on which the employee is free to draw counts as “receipt” for the purposes of assessment under Schedule E and as “payment” for PAYE purposes (see SE42270).

However, for directors only, receipt (and payment) is also treated as occurring when emoluments are credited to an account on which the director is not free to draw. Any fetter on the director’s right to draw the emolument is disregarded for Schedule E and PAYE purposes.

“Director” is defined as in Section 168(8) and (9) ICTA 1988 (see SE20200).

The entry in the records does not have to be made in the director’s own account. A credit in, say, a general remuneration account of the company is enough. So is a written note in a minute book or its computer equivalent. But for the rule to apply

• there must be an entry which identifies the director concerned and
• it must be a credit of an emolument.

Although this rule for directors appears very wide indeed, it does have limitations. See SE42320.

As regards the time at which a person must be a director for the special rule to apply, see SE42360.