Income Tax (Earnings and Pensions) Act 2003 section 706

Exclusion of general earnings from income etc.

Section 706 deals with how PAYE regulations can exclude earnings covered by a PAYE settlement agreement from an employee's income for income tax purposes, and prevent sums paid by the employer under such an agreement from being treated as tax paid by the employee.

• Sums paid by an employer under a PAYE settlement agreement are not to be treated as tax deducted from the employee's general earnings.
• An employee has no right to claim that tax has been paid on their behalf in respect of amounts the employer has accounted for under a PAYE settlement agreement.
• The employee is relieved from their normal income tax obligations in relation to the general earnings covered by the agreement, except to the extent specified in the regulations.
• The earnings covered by the agreement are treated as excluded from the employee's income for further income tax purposes, to the extent set out in the regulations.