Part 2

Employment income: charge to tax
Chapter 4

Taxable earnings: rules applying to employee resident, ordinarily resident and domiciled in UK

When general earnings are received

Receipt of money earnings
18
1
General earnings consisting of money are to be treated for the purposes of this Chapter as received at the earliest of the following times—
- Rule 1 The time when payment is made of or on account of the earnings.
- Rule 2 The time when a person becomes entitled to payment of or on account of the earnings.
- Rule 3
If the employee is a director of a company and the earnings are from employment with the company (whether or not as director), whichever is the earliest of—
  1. the time when sums on account of the earnings are credited in the company’s accounts or records (whether or not there is any restriction on the right to draw the sums);
  2. if the amount of the earnings for a period is determined by the end of the period, the time when the period ends;
  3. if the amount of the earnings for a period is not determined until after the period has ended, the time when the amount is determined.
2
Rule 3 applies if the employee is a director of the company at any time in the tax year in which the time mentioned falls.
3
In this section “director” means—
a
in relation to a company whose affairs are managed by a board of directors or similar body, a member of that body,
b
in relation to a company whose affairs are managed by a single director or similar person, that director or person, and
c
in relation to a company whose affairs are managed by the members themselves, a member of the company,
and includes any person in accordance with whose directions or instructions the directors of the company (as defined above) are accustomed to act.
4
For the purposes of subsection (3) a person is not to be regarded as a person in accordance with whose directions or instructions the directors of the company are accustomed to act merely because the directors act on advice given by that person in a professional capacity.
5
Where this section applies—
a
to a payment on account of general earnings, or
b
to sums on account of general earnings,
it so applies for the purpose of determining the time when an amount of general earnings corresponding to the amount of that payment or those sums is to be treated as received for the purposes of this Chapter.