Income Tax (Earnings and Pensions) Act 2003 section 686

Meaning of "payment"

Section 686 defines when a payment of PAYE income is treated as being made for PAYE purposes, with special rules for company directors and social security pension lump sums.

• A payment of PAYE income is treated as made at the earliest of: when it is actually paid, when the person becomes entitled to it, or (for directors) when it is credited in the company's records, the end of the relevant period, or the date the amount is determined.
• The special director rules apply if the individual was a director at any point during the tax year in which the relevant payment date falls.
• "Director" is broadly defined to include board members, sole directors, members of member-managed companies, and shadow directors — but not professional advisers whose advice happens to be followed.
• Social security pension lump sums that count as PAYE pension income are treated as paid only when the payment is actually made, overriding the earlier-of rules.