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HMRC internal manual

Employment Income Manual

The benefits code: employee with employment for only part of a year

This section only applies to 2015/16 and earlier.

When working out whether an employment has earnings of less than £8,500 a year (EIM20101):

  • if an employment, other than as a director, begins or ends during the year, convert the earnings (including any amount treated as earnings under the benefits code (EIM20006)) for the part year to an annual rate in order to decide whether or not it is an excluded employment (EIM20007)
  • for example, if an employee commenced work on 6 January and earned £2,500 by 5 April, the earnings at an annual rate are £10,000 (4 x £2,500). Hence this is not an excluded employment and the benefits code applies to the employment in full (EIM20006).