2738.This section defines “PAYE income”. It is new.
2739.The term “PAYE income” takes the place of “income assessable under Schedule E” which is used in section 203 of ICTA. The meaning of “PAYE income” might be thought to be different from “income assessable under Schedule E”. But on close examination it has the same meaning. See Note 55 in Annex 2.
2740.Subsection (1) defines PAYE income as the sum of the three amounts defined in this section.
2741.Subsection (2) defines PAYE employment income using the terms introduced in Chapter 3 of Part 2 (see the commentary on page 12).
2742.Subsections (3) and (4) define PAYE pension income for the year. This is taxable pension income (as defined in Part 9) which:
is taxable pension income for the year; and
would be charged under Schedule E in ICTA.
2743.Subsection (5) similarly defines PAYE social security income as the total of any social security income (as defined in Part 10) which:
is taxable social security income for the year and
would be charged under Schedule E in ICTA.
2744.Finally, the label “PAYE income” may not be ideal in all respects. This is because:
it is accurately labelling all the income which is subject to PAYE in the sense that PAYE must try to collect the tax on it; but
not all PAYE income will be subject to PAYE in the sense of deductions: only payments of PAYE income will be subject to those.
2745.But this is no different from the present position with income assessable under Schedule E. In the course of consultation users welcomed the label “PAYE income” as plain language; and felt the subsequent sections (and the PAYE regulations) would make clear the distinction between PAYE income and payments of PAYE income.