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HMRC internal manual

Employment Income Manual

The benefits code: whether an employment has earnings of less than £8,500 a year: the effect of changes in rates of pay during the year

This section only applies for the tax year 2015 to 2016 and earlier.

When working out whether an employment has earnings of less than £8,500 a year and consequently whether or not it is an excluded employment:

  • if an employment continues throughout the year, take all the earnings for the whole year into account in accordance with EIM20101 onwards
  • if the employment is for part of the year only, see EIM20111
  • if the employee is employed part-time, only include the earnings actually received - don’t try to ‘gross up’ to a full-time rate
  • if the earnings total £8,500 or more the employment is subject to the full benefits code for the whole year
  • if the earnings total is less than £8,500 the employment is an excluded employment for the whole of that year

Never contend that, where an employee’s pay varies from month to month, he is within the full benefits code for the months in which he is paid at a rate exceeding £8,500 a year, and in an excluded employment for the others.