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HMRC internal manual

Employment Income Manual

Employment income: basis of assessment for general earnings: the time when earnings are received: actual payment

Rule 1, Sections 18(1) and 686(1) ITEPA 2003Earnings are treated as received when they are actually paid or when a payment on account of earnings is made. For payments on account, see


Actual payment happens when the income comes into the control of the employee so that they are able to deal with it for their own use and benefit.

All the following count as actual payment for the purposes of assessment as employment income, and for the operation of PAYE:

  • handing over cash or a cheque. In law, payment by cheque is made when the employer posts it or hands it over to the employee. The date the cheque is cashed or put into the bank does not matter.
  • a credit transfer to a bank or building society account
  • crediting an account in the employer’s books on which the employee is free to draw at will (Garforth v Newsmith Stainless Ltd (52TC522)). For directors only, there is an additional rule that disregards any restriction on the director’s ability to draw money from the account (see EIM42310).
  • paying the income to a third party or using it in some way at the employee’s discretion or with his consent to a purpose of his choosing. This does not mean that PAYE is due on all “pecuniary liability” payments (see EIM00580). PAYE will only be due if what is paid out is income that is due to the employee, but that the employee directs to be applied in a way of his or her choice (see example EIM42271).