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HMRC internal manual

Employment Income Manual

Employment income: basis of assessment for general earnings: assessments made after a change of practice: income to which the change of practice rule applies

Section 709 ITEPA 2003

The special rule in section 709 ITEPA 2003 applies to income that meets both the following conditions. The income:

  • was taken into account under PAYE
  • was received not less than 12 months before the beginning of the year of assessment in which the assessment or Self Assessment is made (the “assessing year”).

The rule applies to all PAYE income, not just employment income. So it also applies to pensions and taxable social security payments (see EIM74000 onwards and EIM76000 onwards).

Income that has been taken into account under PAYE includes both payments from which tax has been deducted under PAYE and income that has been coded out for convenience, for example benefits in kind or earnings from a subsidiary employment.

Also see: