Income from employment

[Annie]

Employment - contract of service, contract for service

Following are the factors that help determine whether the engagement is employment or not:
 Degree of control exercised
 Financial risk involved
 Equipment required to discharge services
 Assistance, work correction
 Holidays, contract

Basis of assessment for employment income
Net chargeable earnings = Total taxable earnings – Total allowable deductions
Pay as you earn (PAYE)
 PAYE is the way of spreading income tax of employee over the tax year
 Employer is responsible for deducting tax
 Amount deducted must be paid to HMRC within 14 days
 Quarterly payment is possible if liability does not exceeds $1,500
Benefits assessable to P11D employees
 Ancillary service connected with accommodation
 Assets loaned to employee for private use
 Beneficial loan to employee
 Car provided for private use
 Fuel provided for private use
 Vas provided for private use

How administrative burden is reduced
 Person completing the returns on behalf of the employer
 Person handling the returns in the tax office and
 Employee who is required to complete a self-assessments tax return