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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 2003The special rule in Section 709 ITEPA 2003 (see

EIM42440) applies to income that meets both the following conditions. The income:
* was taken into account under PAYE and * was received not less than twelve 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 (seeEIM74000 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.

As regards:
* the operation of the change of practice rule, see EIM42470 * the application of Section 709 ITEPA 2003 to income that is exempt from tax, see EIM42460.