SE42705 - Waivers of remuneration: overview

Sections 202A and 202B ICTA 1988

A waiver of remuneration happens when an employee gives up rights to remuneration and gets nothing in return.

Where the employee gets a non-cash benefit in return this is called a salary sacrifice. For guidance on a salary sacrifice see SE42750 onwards.

The effect of a waiver for income tax purposes depends on its timing.

• If the remuneration waived is given up before it is treated as received for Schedule E assessment purposes then the remuneration given up will not be liable to tax under Schedule E.
• If the remuneration waived is given up after it is treated as received for Schedule E assessment purposes then the employee remains liable under Schedule E on the remuneration given up.

For more details see SE42710.

For examples of this see example SE42720 where salary is waived and see example SE42725 where a bonus is waived.