Income Tax (Earnings and Pensions) Act 2003 section 695A

Employment income under Part 7A

Section 695A establishes how PAYE applies when employment income arises from a third-party arrangement under Part 7A but the relevant step is not a cash payment.

• When a non-cash relevant step counts as employment income under Part 7A, the employer (B) is treated as making a PAYE income payment to the employee (A)
• The deemed payment amount is the best reasonable estimate of the employment income, reduced by any amount subject to the remittance basis under sections 554Z9(2) or 554Z10(2)
• The deemed payment date is the latest of: the date the relevant step is taken, the date employment begins, or 30 days after Finance Act 2011 received Royal Assent
• The employer need not operate PAYE if the third party that took the relevant step has already accounted for income tax on it under PAYE regulations