Income Tax (Earnings and Pensions) Act 2003 (c. 1)

(The document as of February, 2008)

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(b) the claimant is assumed under section 672(2) to be paid an income-based jobseeker's allowance for that week.

(2) If the claimant is not a member of a married or unmarried couple, the claimant's taxable maximum for the week is equal to the age-related amount which would be applicable to the claimant if a contribution-based jobseeker's allowance were payable to the claimant for that week.

(3) If the claimant is a member of a married or unmarried couple, the claimant's taxable maximum for the week is equal to the portion of the applicable amount which is included in the jobseeker's allowance in respect of the couple for that week.

(4) But if--

(a) the claimant is a member of a married or unmarried couple, and

(b) the other member of that couple is prevented by section 14 of JSA 1995 or Article 16 of JS(NI)O 1995 (trade disputes) from being entitled to a jobseeker's allowance,

the claimant's taxable maximum for that week is equal to half the portion of the applicable amount which is included in the jobseeker's allowance in respect of the couple for that week.

674 Taxable maximum: contribution-based jobseeker's allowance

(1) A claimant's taxable maximum for a week is determined under this section if--

(a) the claimant is paid a contribution-based jobseeker's allowance for that week, or

(b) the claimant is assumed under section 672(2) to be paid a contribution-based jobseeker's allowance for that week.

(2) If the claimant is not a member of a married or unmarried couple, the claimant's taxable maximum for the week is equal to the age-related amount which is applicable to the claimant for that week.

(3) If the claimant is a member of a married or unmarried couple, the claimant's taxable maximum for the week is equal to the portion of the applicable amount which would be included in the jobseeker's allowance in respect of the couple if an income-based jobseeker's allowance were payable to the claimant for that week.

675 Interpretation

(1) In sections 671 to 674, except in relation to Northern Ireland--

"age-related amount" and "applicable amount" mean the amounts determined as such in accordance with regulations made under section 4 of JSA 1995;
"contribution-based jobseeker's allowance" and "income-based jobseeker's allowance" have the same meaning as in section 1(4) of JSA 1995;
"married couple" and "unmarried couple" have the same meaning as in section 35(1) of JSA 1995.

(2) In sections 671 to 674, in relation to Northern Ireland--

"age-related amount" and "applicable amount" mean the amounts determined as such in accordance with regulations made under Article 6 of JS(NI)O 1995;
"contribution-based jobseeker's allowance" and "income-based jobseeker's allowance" have the same meaning as in Article 3(4) of JS(NI)O 1995;
"married couple" and "unmarried couple" have the same meaning as in Article 2(2) of JS(NI)O 1995.

Increases in respect of children

676 Increases in respect of children

No liability to income tax arises on a part of a taxable benefit listed in Table A which is attributable to an increase in respect of a child.

Chapter 5 UK social security benefits wholly exempt from income tax

677 UK social security benefits wholly exempt from tax: Table B

(1) No liability to income tax arises on the United Kingdom social security benefits listed in Table B.

TABLE B--PART 1

BENEFITS PAYABLE UNDER PRIMARY LEGISLATION

Social security benefit

Payable under

Attendance allowance

SSCBA 1992

SSCB(NI)A 1992

Section 64

Back to work bonus

JSA 1995

JS(NI)O 1995

Section 26

Article 28

Bereavement payment

SSCBA 1992

SSCB(NI)A 1992

Section 36

Child benefit

SSCBA 1992

SSCB(NI)A 1992

Section 141

Section 137

Child's special allowance

SSCBA 1992

SSCB(NI)A 1992

Section 56

Child tax credit

TCA 2002

Part 1

Council tax benefit

SSCBA 1992

Section 131

Disability living allowance

SSCBA 1992

SSCB(NI)A 1992

Section 71

Guardian's allowance

SSCBA 1992

SSCB(NI)A 1992

Section 77

Housing benefit

SSCBA 1992

SSCB(NI)A 1992

Section 130

Section 129

Industrial injuries benefit (apart from industrial death benefit)

SSCBA 1992

SSCB(NI)A 1992

Section 94

Pensioner's Christmas bonus

SSCBA 1992

SSCB(NI)A 1992

Section 148

Section 144

Payments out of the social fund

SSCBA 1992

SSCB(NI)A 1992

Section 138

Section 134

Severe disablement allowance

SSCBA 1992

SSCB(NI)A 1992

Section 68

State maternity allowance

SSCBA 1992

SSCB(NI)A 1992

Section 35

State pension credit

SPCA 2002

SPCA(NI) 2002

Section 1

Working tax credit

TCA 2002

Part 1

TABLE B -- PART 2

BENEFITS PAYABLE UNDER REGULATIONS

Social security benefit

Payable under regulations made under

Compensation payments where child support reduced because of a change in legislation

CSA 1995

CS(NI)O 1995

Section 24

Article 17

Payments to reduce under-occupation by housing benefit claimants

WRPA 1999

WRP(NI)O 1999

Section 79

Article 70

(2) Industrial death benefit is charged to tax under Part 9 (see section 577).

(3) In this section "industrial death benefit" means any benefit payable under--

(a) section 94 of, and Part 6 of Schedule 7 to, SSCBA 1992, or

(b) section 94 of, and Part 6 of Schedule 7 to, SSCB(NI)A 1992.

Chapter 6 Taxable foreign benefits

678 Taxable benefits: foreign benefits

(1) This section applies to any benefit which is payable under the law of a country or territory outside the United Kingdom if--

(a) it is substantially similar in character to a benefit listed in Table A, and

(b) it is payable to a person resident in the United Kingdom.

(2) But this section does not apply to a benefit which is charged to tax under Part 9 (pension income).

679 Taxable social security income

(1) If section 678 applies, the taxable social security income for a taxable benefit for a tax year is the amount on which tax would be chargeable if the benefit were chargeable to tax under Case V of Schedule D (see in particular the provisions of ICTA listed in subsection (2)).

(2) Those provisions of ICTA are--

(a) sections 65 and 68 (calculation of the amount of the income on which tax is to be charged in the tax year);

(b) section 584 (relief for unremittable overseas income);

680 Person liable for tax

The person liable for any tax charged under this Part on a benefit to which section 678 applies is the person receiving or entitled to the benefit.

Chapter 7 Taxable and other foreign benefits: exemptions

681 Taxable and other foreign benefits: exemptions

(1) No liability to income tax arises on a taxable foreign benefit if, or to the extent that, the corresponding UK benefit is exempt income.

(2) No liability to income tax arises on a benefit which is payable under the law of a country or territory outside the United Kingdom if it is substantially similar in character to a United Kingdom social security benefit listed in Table B.

(3) In this section--

"taxable foreign benefit" means a benefit to which section 678 applies;
"corresponding UK benefit", in relation to a taxable foreign benefit, means the taxable benefit listed in Table A to which the foreign benefit is substantially similar in character (see section 678).

Part 11 Pay As You Earn

Chapter 1 Introduction

682 Scope of this Part

(1) This Part provides for the assessment, collection and recovery of income tax in respect of PAYE income.

(2) The provisions of this Part are contained in--

this Chapter (which gives the meaning of "PAYE income"),
Chapter 2 (PAYE: general),
Chapter 3 (PAYE: special types of payer or payee),
Chapter 4 (PAYE: special types of income),
Chapter 5 (PAYE settlement agreements), and
Chapter 6 (miscellaneous and supplemental).

(3) Provision for PAYE regulations is made by Chapters 2 to 6.

683 PAYE income

(1) For the purposes of this Act and any other enactment (whenever passed) "PAYE income" for a tax year consists of--

(a) any PAYE employment income for the year,

(b) any PAYE pension income for the year, and

(2) "PAYE employment income" for a tax year means income which consists of--

(a) any taxable earnings from an employment in the year (determined in accordance with section 10(2)), and

(b) any taxable specific income from an employment for the year (determined in accordance with section 10(3)).

(3) "PAYE pension income" for a tax year means, subject to subsection (4), taxable pension income for the year determined in accordance with any of the following provisions--

section 571 (United Kingdom pensions),
section 578 (United Kingdom social security pensions),
section 581 (approved retirement benefits schemes: pensions and annuities),
section 584 (approved retirement benefits schemes: unauthorised payments),
section 591 (former approved superannuation funds: annuities),
section 596 (approved personal pension schemes: annuities),
section 599 (approved personal pension schemes: income withdrawals),
section 602 (approved personal pension schemes: unauthorised payments),
section 616 (certain overseas government pensions paid in the United Kingdom),
section 621 (the House of Commons Members' Fund),
section 634 (voluntary annual payments).

(4) "PAYE pension income" does not include any taxable pension income determined in accordance with section 584 that would not be such income if section 587 (marine pilots' benefit fund) were omitted.

(5) "PAYE social security income" for a tax year means taxable social security income for the year determined in accordance with section 658(4) or (5) (taxable United Kingdom social security benefits).

Chapter 2 PAYE: general

684 PAYE regulations

(1) The Board of Inland Revenue must make regulations ("PAYE regulations") with respect to the assessment, charge, collection and recovery of income tax in respect of all PAYE income.

(2) PAYE regulations may, in particular, include any such provision as is set out in the following list.

List of Provisions

1. Provision--

(a)

for requiring persons making payments of, or on account of, PAYE income to make, at the time of the payment, deductions or repayments of income tax calculated by reference to tax tables prepared by the Board of Inland Revenue, and

(b)

for making persons who are required to make any such deductions or repayments accountable to or, as the case may be, entitled to repayment from the Board.

2. Provision for the collection and recovery, whether by deduction from any PAYE income paid in any later year or otherwise, of income tax in respect of any such income which has not been deducted or otherwise recovered during the year.

3. Provision for the production to, and inspection by, persons authorised by the Board of wages sheets and other documents and records for the purposes of satisfying themselves that income tax has been and is being deducted, repaid and accounted for in accordance with the regulations.

4. Provision for requiring an employer or former employer to provide any information, within a prescribed time, about payments or other benefits provided or to be provided, including those provided or to be provided in connection with--

(a)

the termination of a person's employment, or

(b)

a change in the duties of or general earnings from a person's employment.

5. Provision for the way in which any matters provided for by the regulations are to be proved.

6. Provision--

(a)

for requiring the payment of interest on sums due to the Board which are not paid by the due date,

(b)

for determining the date (being not less than 14 days after the end of the tax year in respect of which the sums are due) from which such interest is to be calculated, and

(c)

for enabling the repayment or remission of such interest.

7. Provision for requiring the payment of interest on sums due from the Board and for determining the date from which such interest is to be calculated.

8. Provision for the assessment and charge of income tax in respect of PAYE income.

9. Provision for appeals with respect to matters arising under the regulations which would otherwise not be the subject of an appeal.

10. Different provision for different cases or classes of case.

11. Any incidental, consequential, supplementary and transitional provision which appears to the Board to be expedient.

(3) The deductions of income tax required to be made by PAYE regulations under item 1 in the above list may be required to be made at the basic rate or other rates in such cases or classes of case as may be provided by the regulations.

(4) Interest required to be paid by PAYE regulations under item 6 or 7 in the above list must be paid without any deduction of income tax and may not be taken into account in computing any income, profits or losses for any tax purposes.

(5) PAYE regulations must not affect any right of appeal to the General or Special Commissioners which a person would have apart from the regulations.

(6) It does not matter for the purposes of PAYE regulations that income is wholly or partly income for a tax year other than that in which the payment is made.

(7) PAYE regulations have effect despite anything in the Income Tax Acts.

(8) In this Act and any other enactment (whenever passed) "PAYE regulations" means regulations under this section.

685 Tax tables

(1) The Board of Inland Revenue must construct tax tables with a view to securing that so far as possible--

(a) the total income tax payable in respect of PAYE income for any tax year is deducted from PAYE income paid during that year, and

(b) the income tax deductible or repayable on the occasion of any payment of, or on account of, PAYE income is such that the following proportions are the same--

(i) the proportion which the total net income tax deducted since the beginning of the tax year bears to the total income tax payable for the year, and

(ii) the proportion which the part of the tax year which ends with the date of the payment bears to the whole year.

(2) References in subsection (1) to the total income tax payable for the year are to be read as references to the total income tax estimated to be payable for the year in respect of the income in question--

(a) subject to a provisional deduction for allowances and reliefs, and

(b) subject, if necessary, to an adjustment for amounts overpaid or remaining unpaid on account of income tax in respect of PAYE income for any previous year.

(3) For the purpose of estimating the total income tax payable as mentioned in subsection (1)(a), it may be assumed, in relation to any payment of, or on account of, PAYE income, that the following proportions will be the same--

(a) the proportion which the income paid in the part of the tax year which ends with the making of the payment bears to the income for the whole year, and

(b) the proportion which that part of the tax year bears to the whole year.

686 Meaning of "payment"

(1) For the purposes of PAYE regulations, a payment of, or on account of, PAYE income of a person is treated as made at the earliest of the following times--

Rule 1

The time when the payment is made.

Rule 2

The time when the person becomes entitled to the payment.

Rule 3

If the person is a director of a company and the income is income from employment with the company (whether or not as director), whichever is the earliest of--

(a)

the time when sums on account of the income are credited in the company's accounts or records (whether or not there is any restriction on the right to draw the sums);

(b)

if the amount of the income for a period is determined before the period ends, the time when the period ends;

(c)

if the amount of the income for a period is not determined until after the period has ended, the time when the amount is determined.

(2) Rule 3 applies if the person is a director of the company at any time in the tax year in which the time mentioned falls.

(3) In this section "director" means--

(a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or body,

(b) in relation to a company whose affairs are managed by a single director or other person, that director or person, and

and includes any person in accordance with whose directions or instructions the company's directors (as defined above) are accustomed to act.

(4) For the purposes of subsection (3) a person is not regarded as a person in accordance with whose directions or instructions the company's directors are accustomed to act merely because the directors act on advice given by that person in a professional capacity.

Chapter 3 PAYE: special types of payer or payee

687 Payments by intermediary

(1) If any payment of, or on account of, PAYE income of an employee is made by an intermediary of the employer, the employer is to be treated, for the purposes of PAYE regulations, as making a payment of the income of an amount equal to the amount given by subsection (3).

(2) Subsection (1) does not apply if the intermediary (whether or not a person to whom PAYE regulations apply) deducts income tax from the payment the intermediary makes, and accounts for it, in accordance with PAYE regulations.

(3) The amount referred to is--

(a) if the amount of the payment made by the intermediary is an amount to which the recipient is entitled after deduction of income tax, the aggregate of the amount of the payment and the amount of any income tax due, and

(b) in any other case, the amount of the payment.

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