UT (Tax & Chancery) UT/2023/000098 - [2024] UKUT 00404 (TCC)

All references to sections, Chapters or Parts are to sections, Chapters or Parts of the Income Tax (Earnings and Pensions) Act 2003 unless otherwise stated.

Section 6(1) provides that the charge to tax on employment income is a charge to tax on “general earnings”. Section 7(3) then provides that “general earnings” means earnings within Chapter 1 of Part 3. Chapter 1 of Part 3 contains a single section, s62, which defines “earnings” for the purposes of calculating employment income.

Section 62 provides:

“Section 62 - Earnings

(1)

This section explains what is meant by “earnings” in the employment income Parts.

(2)

In those Parts “earnings”, in relation to an employment, means -

(a)

any salary, wages or fee,

(b)

any gratuity or other profit or incidental benefit of any kind obtained by the employee if it is money or money's worth, or

(c)

anything else that constitutes an emolument of the employment.

(3)

For the purposes of subsection (2) “money's worth” means something that is -

(a)

of direct monetary value to the employee, or

(b)

capable of being converted into money or something of direct monetary value to the employee.”

Section 9(2) provides that in the case of general earnings, the amount charged is the “net taxable earnings from an employment” in the year. Section 15 applies to general earnings for a tax year in which the employee is resident, ordinarily resident and domiciled in the UK and provides that the full amount of any general earnings which are received in a tax year is an amount of “taxable earnings” from the employment in that year.

“Earnings” are defined separately for the purposes of national insurance contributions (“NICs”). Section 3(1) Social Security Contributions and Benefits Act 1992 provides:

“3.

“Earnings” and “earner”

(1)

In this Part of this Act and Parts II to V below –

(a)

“earnings” includes any remuneration or profit derived from an employment; and

(b)

“earner” shall be construed accordingly.”