Income Tax (Earnings and Pensions) Act 2003 section 554Z6

Overlap with certain earnings

Section 554Z6 prevents double taxation where a relevant step under the disguised remuneration rules (Part 7A) gives rise to income that is already taxable as employment earnings under other provisions of the Act.

• Where a relevant step also gives rise to employment earnings already taxable under other ITEPA provisions, those other provisions take priority over the Part 7A charge
• The taxable value of the relevant step is reduced by the amount of those employment earnings, but never below nil, and only after any prior reductions for residence issues or overlap with earlier relevant steps
• Relevant earnings for this purpose include general earnings, amounts treated as earnings from employment-related securities, and deemed employment payments under the intermediaries (IR35) rules
• Exempt income and income falling within the trading income rules of ITTOIA 2005 does not count as relevant earnings for this purpose