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HMRC internal manual

Employment Income Manual

Restrictive covenants: consideration taxable as general earnings

Section 225 ITEPA 2003

Treatment of payments for entering into restrictive covenants

Payments made for entering into restrictive covenants or undertakings are treated as general earnings (see EIM00511). The employee or office holder is taxed on the whole amount received in the year of assessment. As earnings, the consideration is chargeable only if it falls within the scope of the Sections set out in EIM03601.