Income Tax (Earnings and Pensions) Act 2003 section 61W

Prevention of double charge to tax and allowance of certain deductions

Section 61W prevents a worker from being taxed twice on the same income by allowing certain deductions where a deemed payment has already been subject to PAYE under the off-payroll working rules involving intermediaries.

• Where a deemed payment has already been taxed under PAYE, the actual payment from the intermediary to the worker can be reduced to avoid double taxation
• The reduction can reflect the deemed payment amount, eligible capital allowances, and qualifying pension contributions made in the same tax year
• Certain pension contributions are excluded from the reduction, including excess contributions later repaid and those already used as deductions elsewhere
• The relief applies regardless of the form of the payment — whether it is salary, a company distribution (dividend), or any other type of payment