Income Tax (Trading and Other Income) Act 2005 section 783AO

Exclusion from relief: payments by employer

Section 783AO is an anti-avoidance rule that prevents employers from reclassifying payments to employees or their spouses and civil partners as trading or miscellaneous income in order to exploit the trading allowance.

• Relief under this chapter is completely denied for a tax year if the individual has relevant income that includes a payment from an employer
• The restriction applies where the payment is made by, or on behalf of, a person who employs the individual at the time of the payment
• The restriction also applies where the individual receiving the payment is the spouse or civil partner of an employee of the person making the payment
• The purpose is to prevent employers routing what is essentially employment income through alternative channels to take advantage of the trading allowance