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HMRC internal manual

Business Income Manual

Sub-postmasters: how chargeable

The remuneration of a sub-postmaster is in law chargeable as employment income. Where, however, a retail trade is carried on from the same premises as the sub-post office, the remuneration as sub-postmaster may in practice be treated as a trade receipt. Where this is done, the officer dealing with the self assessment should ask the processing office to issue code NT for the salary. A note should be kept to make sure the salary is taxed as part of the trade receipts. Where no trade is carried on, or the trade is negligible, the remuneration as sub-postmaster should be charged as employment income.

Where a sub-postmaster also carrying on a trade requests the statutory basis of charge for both sources of income, the remuneration as sub-postmaster should be charged as employment income and excluded from the trade receipts. In such a case, the expenses allowed in the computation of the trade profits should exclude any expenses which relate to the sub-postmaster’s employment income; any necessary adjustments should, however, be made on broad lines.

Where a retail trade or business is carried on by a company from the same premises as a sub-post office, the Post Office salary is the income of the sub-postmaster and not of the company. In practice, however, no objection should be raised to a request to treat the Post Office salary as income of the company provided that the sub-postmaster is required to, and does, hand over the remuneration to the company.

The practice of treating the remuneration of a sub-postmaster as a trade receipt of an individual or a company applies for tax purposes only. Class 1 National Insurance Contributions remain payable in respect of the Post Office salary. The amount to be included in computing the trade profits is the gross remuneration before deduction of National Insurance Contributions. National Insurance Contributions are not an allowable deduction either from employment income or from the receipts of the trade.

As regards termination payments received by a sub-postmaster on ceasing to hold office, see EIM68228.