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HMRC internal manual

Employment Income Manual

Employment income: basis of assessment for general earnings: the time when earnings are received: crediting of earnings in the accounts or records of the company

Rule 3(a), Sections 18(1) and 686(1) ITEPA 2003 For all employees and office holders, the crediting of remuneration to an account in the employer’s books on which the employee is free to draw counts as receipt for the purposes of assessment as employment income and as payment for PAYE purposes (see


However, for directors only, receipt (and payment) is also treated as occurring when earnings are credited to an account on which the director is not free to draw. Any restriction on the director’s right to draw the earnings is disregarded for assessment and PAYE purposes.

“Director” is defined as in Section 67 ITEPA 2003 (see EIM20200).

The entry in the records does not have to be made in the director’s own account. A credit in, for example, a general remuneration account of the company is enough. So is a written note in a minute book or its computer equivalent. But for the rule to apply:

  • there must be an entry that identifies the director concerned and
  • it must be a credit of earnings.Although this rule for directors appears very wide indeed, it does have limitations (see


As regards the time at which a person must be a director for the special rule to apply, see EIM42360.