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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income: basis of assessment for general earnings: earnings received before an employment starts or after it ends: example of a case where earnings are received before an employment starts

ExampleAn employee is paid a lump sum of £5,000 on 15 March 2005 under the terms of a contract whereby she agrees to become a director of a company from 1 May 2005. She is resident and ordinarily resident in the United Kingdom in 2005/06, and she accepts that the lump sum is taxable in full as earnings from her office as director. Accordingly, PAYE must be operated on 15 March 2005. The lump sum will be assessed in 2004/05 (the year of receipt), even though the employment does not start until 2005/06. Card 4 of the Employer’s Basic Guide to PAYE still applies.

As regards the chargeability of sums paid to induce a person to take up an office or employment, see EIM00700.

If it is contended that pre-commencement earnings cannot be attributed to a year when the job was held, see EIM40005.