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HMRC internal manual

Employment Income Manual

Waivers of remuneration: more detail

Sections 15(2) and 18 ITEPA 2003 and Section 43 FA 1989For an overview of waivers of remuneration see


A waiver can be of fees and bonuses as well as salary.

The crucial factor for tax purposes is whether the remuneration waived is given up before it is treated as received for employment income purposes. Once a director or employee is treated as having received money earnings (see EIM42260 onwards):
* PAYE is deductible * they are taxable earnings of the employee and * the employer is entitled to a deduction for them in computing the profits of its business.A subsequent waiver of remuneration will neither reduce the amount of remuneration subject to PAYE nor the amount of taxable earnings. For more detail on this point see


The link established by Finance Act 1989 between the time when employers can obtain a deduction for earnings in computing their business profits and the deduction of PAYE from them, should result in companies not voting remuneration that they are unable to pay.