Proposed withdrawal of concession about treating certain employment income as trading income

02 October 2014

HMRC are proposing to withdraw an extra-statutory concession which is believed to be used by only a very small number of people.

The HRMC announcement concerns three current concessions, only the first of which (EIM 03002) affects employers.

HMRC says that:

EIM 03002 is a longstanding concession. Under certain circumstances, it enables an

individual to treat their employment income as trading income chargeable to Income Tax

(for a sole trader/partnership) or Corporation Tax. This works by relieving the company or organisation paying the remuneration of the obligation to operate PAYE in respect of relevant payments of employment income.

As far as we are aware Defra were the main users of the EIM 03002 practice. They have

recently changed how they engage veterinary practices and amended their own legislation

from April 2014 in relation to the use of Official Veterinarians during an animal health crisis.

We are in the process of negotiating a new, limited concession with Defra that is within the Commissioners’ discretionary powers and this will be published in EIM soon. The relevant

Northern Ireland department is aware of the consultation proposals and is currently considering the matters raised.

Given the above, it has been decided to withdraw this administrative practice. The usual

employment income rules and benefits code will apply to all such payments from 6 April


The HMRC announcement explains how to raise any questions or concerns about this proposal.