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Under the normal rules, income tax on notional payments is to be deducted from actual payments made in the same tax period in which the notional payment is made (the 'relevant time')¹. This procedure is adapted where a notional payment becomes a qualifying payment of retrospective income (see E4.1117); in this case the now taxable notional payment is treated as made on the day the Act imposing the retrospective liability is passed: the actual payments from which tax is to be deducted are those in the next tax period following that date². This adapted definition of the 'relevant time' is applied to the PAYE regulations in respect of retrospective employment income³.

Where an amount of retrospective employment income is paid in an open year (see E4.1117), the deductions working sheet or electronic equivalent (see E4.1141) is completed as if the payment were made at the earlier of the relevant time and, in the case of a former employee, the last tax period of employment⁴.

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