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HMRC internal manual

Employment Income Manual

Tax treatment of racehorse training or stud farm establishment employees: special payments

Section 62 ITEPA 2003

By custom an employee of a racehorse training or stud farm establishment may receive payments for services peculiar to such establishments in addition to his basic wage. The more common items are special presents from owners and employers, distributions of a percentage of stake-money, Christmas presents and ‘leads’ (fees for leading horses between stable, station, stud farm, etc.). In a racehorse training establishment, presents for winning horses and in a stud farm, presents for mares in foal and groom fees may also be received.

All these payments, which may be described differently by various establishments, are taxable as employment income. Where they are paid by the employer, or by the employer on behalf of the owner of the horse, they should be included as pay and taxed under PAYE in the normal way.

Where such payments are made direct to the employee by the owner of the horse, and not through the employer, they should be taken into account in the coding where possible or dealt with by assessment at the end of the year.