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13A.1 Introduction |
ITEPA 2003 replaces those parts of TA 1988 which governed schedule E with a separate Act of 725 sections and eight schedules. The structure and content of the Act require one to refer to its subdivisions, not least because the draftsman often makes cross references to these rather than to sections, so one must get used to the Act being divided into parts which are subdivided into chapters. Like the previous schedule E, the Act covers earnings from employment (part 3: chapter 1). It also covers certain amounts which are treated as earnings (mostly benefits in kind (also in part 3)—but also balancing charges under the capital allowance legislation and sums arising where agency workers or intermediate personal service companies are concerned.1 These receipts are known compendiously as ‘general earnings’. Parts 1 and 2 of ITEPA are introductory. Part 4 is a most welcome feature as it gathers together the exemptions which were previously scattered around the act; unfortunately the system of cross referencing from the charging parts of the Act is poor. Part 5 govern deductions. |
ITEPA has its own jargon and now moves from ‘general earnings’ to ‘specific employment income’, which is its not-so-short-hand way of referring to what it calls amounts which ‘count as’ employment income; these are income from certain golden handshakes and some benefits from and payments to unapproved pension schemes (part 6) and from securities (part 7).2 These pieces of legislation are covered in this book in chapters 13A–18A. Like the old schedule E the new Act also covers the taxation of pension payments (part 9) and certain social security payments (part 10). The PAYE scheme is to be found in part 11 and payroll giving in part 12, Income tax is now charged on employment income on the earnings from an employment or office.3 The basic definition of earnings in chapter 3, part 1 (ITEPA section 62), having referred to salaries, wages, fees, certain gratuities and benefits in kind, then uses the old and continuing words ‘emoluments of the employment’. Since ITEPA rewrites but does not generally reform the law the old case law built on that word emolument still applies payments for services are taxed as emoluments. |