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Income Tax (Earnings and Pensions) Act 2003

Section 6: Nature of charge to tax on employment income

40.This section provides in subsection (1) that the charge to tax on employment income under Part 2 is split into a charge to tax on “general earnings” and “specific employment income”. The labels “employment income”, “general earnings” and “specific employment income” are new, and are explained in section 7.

41.Subsection (2) provides a signpost to section 9 which sets out how to work out the amount of general earnings or specific employment income that is charged to tax in a particular tax year.

42.Subsection (3) is a pointer to Chapters 4 and 5 which derive from the Cases of Schedule E. Those Chapters set out the rules relating to residence, domicile etc that apply to general earnings. Those Chapters have no application to “specific employment income”.

43.Subsection (4) provides a signpost to section 13 which in turn makes clear who is liable for tax under this Part.

44.Subsections (1) to (4) are new, although subsection (1) derives in part from paragraphs 1 and 5 of section 19(1) of ICTA.

45.Subsection (5) provides the one exception to the basic rule that employment income is charged to tax on income from employments. This Act replaces all charges to tax under Schedule E, but there is one category of income from employment that is not charged to tax under Schedule E. The employment duties of specified types of divers and diving supervisors are treated as if they constitute a trade and are charged to tax under Schedule D. Subsection (5) of this section reflects the effect of section 314(1) of ICTA in removing the income from employment of those divers and diving instructors from the scope of Schedule E.

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