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What is a pecuniary liability?

The definition of ‘earnings’ for the purposes of tax includes anything that is of direct monetary value to the employee. If an employer pays an employee’s bill or meets some other kind of liability that the employee is obliged to pay themselves, this is of direct monetary value to the employee, and is known as meeting the employee’s ‘pecuniary liability’.

Where an amount is the employee’s pecuniary liabilities, the employee is assessed under PAYE on the money that is used to settle that liability, and not as a benefit. For example, where an employer settles an employee’s phone bill, the amount of money used to settle that bill is assessed under PAYE. It is not treated as a benefit of the provision of a phone line or phone calls. A pecuniary liability can be summarised in the following diagram:

The payment made by the employer can be a one-off occurrence, eg settling an outstanding parking fine to prevent further proceedings being taken against the employee, or it can be a contractual