SE42470 - Emoluments from offices and employments: basis of assessment: assessments made after a change of practice - how the change of practice rule applies

Section 206 ICTA 1988

The rule where there has been a change of practice ( SE42440) is as follows.

• If an assessment is being made which includes Schedule E income within SE42450 received more that 12 months before the start of the assessing year (the year in which you are making the assessment), and
• the assessment or self-assessment is being made more than 12 months after the year to which it relates, then
• the assessment or self-assessment must be made in accordance with the practice generally prevailing on the 5 April of the year following the year for which it is being made.

For example, if the generally prevailing practice in relation to emoluments of employees is changed by a decision in the Courts on 1 May 2004, make assessments

• for 2002/03 and earlier years on the old practice whenever the assessments are made
• for 2003/04 onwards on the new practice whenever the assessments are made.

The rule operates in the simple way shown in this example because emoluments of employees are assessed for the year they are received (see SE42200 onwards).

As regards other items of income charged under Schedule E which are not emoluments of employees (such as pensions and Social Security payments) the rule does not operate so simply in cases where the income is assessable in a different year to the year in which it was actually received.

Such cases will be rare, but if in any case you believe Section 206 ICTA 1988 may apply, submit to Employment Income Technical.