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Chapter EIM00750

Document Cited authorities 3 Cited in Related
Vincent
Published date22 May 2014
Record NumberEIM00750
Section 62 ITEPA 2003

To be taxable as earnings within Section 62 ITEPA 2003 a payment must come from the employment (see EIM00600).

Sometimes an employee will receive a payment that they would not have received but for the fact that they are an employee. That on its own is not sufficient to make the payment taxable as earnings within Section 62. Lord Woolf, in Mairs v Haughey (66TC273) explained that the authorities had consistently held that a sum paid to relieve distress is not earnings. Additionally there may be separate consideration for the payment showing that the payment does not arise from the employment (see EIM00710).

In Hochstrasser v Mayes (38TC673) an employee received the difference between the purchase and sale price of his house. The payment was made under the employer’s housing scheme relating to employees transferred from one part of the country to another. Under the scheme a transferred employee was reimbursed any loss he sustained on selling his house but he had first of all to offer to sell the house to his employer at market value. It was held that the payment was not a profit from the employment.

The source of the payment was the housing scheme not the employment. In Laidler v Perry (42TC351), Lord Hodson said at page 366 that the decision in Hochstrasser v Mayes:

“…depended on its own peculiar facts, there being a collateral agreement between employer and employee quite outside their contracts of service to compensate the employees for any loss they might incur on selling their houses on transfer from one part to another.”

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