E4.105 Employment Income—Relevance Of Identity Of Income Payer Or Contractual Right To Income

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Commentary

Personal and employment tax

In order for payments to constitute earnings, it is essential that they be derived from the employment. HMRC is understood to regard this phrase as covering all payments received in exchange for, or as a reward for, an employee's labour, but as indicated in the following text, in practice it tends to treat all payments made by an employer to an employee as earnings.

Employment income—relationship between payer and recipient

The fact that the payer is the employer and the recipient is the employee is a strong indication that the payment is derived from the employment, but it is not conclusive any more than the fact that payment is made by a third party is conclusive of its not constituting earnings. Indeed, if the payment is sufficiently referable to the employment, the fact that it is made by a third party (ie a person other than the actual employer) is irrelevant (eg

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