Income Tax (Earnings and Pensions) Act 2003
2003 c. 1
An Act to restate, with minor changes, certain enactments relating to income tax on employment income, pension income and social security income; and for connected purposes.
[6th March 2003]
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
(1) This Act imposes charges to income tax on—
(a) employment income (see Parts 2 to 7A ),
(b) pension income (see Part 9), and
(c) social security income (see Chapters 1 to 7 of Part 10).
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) This Act also—
(a) confers certain reliefs in respect of liabilities of former employees (see Part 8),
(aa) makes provision for the high income child benefit charge (see Chapter 8 of Part 10),
(ab) makes provision for the winter fuel payment charge (see Chapter 9 of Part 10),
(b) provides for the assessment, collection and recovery of income tax in respect of employment, pension or social security income that is PAYE income (see Part 11), ...
(ba) allows deductions to be made from such income in respect of certain debts payable to the Commissioners for Her Majesty’s Revenue and Customs (see Part 11), and
(c) allows deductions to be made from such income in respect of payroll giving (see Part 12).
(1) Schedule 1 (abbreviations and defined expressions) applies for the purposes of this Act.
(2) In Schedule 1—
(a) Part 1 gives the meaning of the abbreviated references to Acts and instruments used in this Act, and
(b) Part 2 lists the places where expressions used in this Act are defined or otherwise explained.
(3) Part 2 of Schedule 1 does not apply to expressions used in Chapters 6 to 9 of Part 7 (share incentive plans and other arrangements for acquiring shares): separate indexes relating to these Chapters appear at the end of Schedules 2 to 5.
(1) The structure of the employment income Parts is as follows—
this Part imposes the charge to tax on employment income, and sets out—
(a) how the amount charged to tax for a tax year is to be calculated, and
(b) who is liable for the tax charged;
Part 3 sets out what are earnings and provides for amounts to be treated as earnings;
Part 4 deals with exemptions from the charge to tax under this Part (and, in some cases, from other charges to tax);
Part 5 deals with deductions from taxable earnings;
Part 6 deals with employment income other than earnings or share-related income; and
Part 7 deals with income and exemptions relating to securities and securities options acquired in connection with an employment.
Part 7A deals with employment income provided through third parties.
(2) In this Act “the employment income Parts” means this Part and Parts 3 to 7A .
4 “Employment” for the purposes of the employment income Parts
(1) In the employment income Parts “employment” includes in particular—
(a) any employment under a contract of service,
(b) any employment under a contract of apprenticeship, and
(c) any employment in the service of the Crown.
(2) In those Parts “employed”, “employee” and “employer” have corresponding meanings.
(1) The provisions of the employment income Parts that are expressed to apply to employments apply equally to offices, unless otherwise indicated.
(2) In those provisions as they apply to an office—
(a) references to being employed are to being the holder of the office;
(b) “employee” means the office-holder;
(c) “employer” means the person under whom the office-holder holds office.
(3) In the employment income Parts “office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders.
(1) The charge to tax on employment income under this Part is a charge to tax on—
(a) general earnings, and
(b) specific employment income.
The meaning of “employment income”, “general earnings” and “specific employment income” is given in section 7.
(2) The amount of general earnings or specific employment income which is charged to tax in a particular tax year is set out in section 9.
(3) The rules in Chapters 4 and 5 of this Part, which are concerned with—
(a) the residence ... of an employee in a tax year, ...
(aa) whether section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to an employee for a tax year, and
(b) the tax year in which amounts are received or remitted to the United Kingdom,
apply for the purposes of the charge to tax on general earnings but not that on specific employment income.
(3A) The rules in Chapter 5B, which are concerned with the matters mentioned in subsection (3)(a) to (b), apply for the purposes of the charge to tax on certain specific employment income arising under Part 7 (securities etc).
(4) The person who is liable for any tax charged on employment income is set out in section 13.
(5) Employment income is not charged to tax under this Part if it is within the charge to tax under
(a) Part 2 of ITTOIA 2005 (trading income) by virtue of section 15 (divers and diving supervisors), 16A (voluntary office-holders: compensation for lost profits), 16B (payments to company directors) or 16C (professionals in practice: incidental income from an office or employment) of that Act, or
(b) Part 3 of CTA 2009 (trading income) by virtue of section 40A (payments to company directors) or 40B (professionals in practice: incidental income from an office or employment) of that Act.
7 Meaning of “employment income”, “general earnings” and “specific employment income”
(1) This section gives the meaning for the purposes of the Tax Acts of “employment income”, “general earnings” and “specific employment income”.
(2) “Employment income” means—
(a) earnings within Chapter 1 of Part 3,
(b) any amount treated as earnings (see subsection (5)), or
(c) any amount which counts as employment income (see subsection (6)).
(3) “General earnings” means—
(a) earnings within Chapter 1 of Part 3, or
(b) any amount treated as earnings (see subsection (5)),
excluding in each case any exempt income.
(4) “Specific employment income” means any amount which counts as employment income (see subsection (6)), excluding any exempt income.
(5) Subsection (2)(b) or (3)(b) refers to any amount treated as earnings under—
(a) Chapters 7 to 11 of this Part (agency workers, workers under arrangements made by intermediaries, ... workers providing services through managed service companies and purported umbrella companies),
(b) Chapters 2 to 10 of Part 3 (the benefits code),
(c) Chapter 12 of Part 3 (payments treated as earnings),
(ca) section 402B (termination payments, and other benefits, that cannot benefit from section 403 threshold), or
(d) section 262 of CAA 2001 (balancing charges to be given effect by treating them as earnings).
(6) Subsection (2)(c) or (4) refers to any amount which counts as employment income by virtue of—
(a) Part 6 (income which is not earnings or share-related),
(b) Part 7 (income and exemptions relating to securities and securities options)
(ba) Part 7A (employment income provided through third parties), or
(c) any other enactment.
For the purposes of the employment income Parts, an amount of employment income within paragraph (a), (b) or (c) of section 7(2) is “exempt income” if, as a result of any exemption in Part 4 or elsewhere, no liability to income tax arises in respect of it as such an amount.
(1) The amount of employment income which is charged to tax under this Part for a particular tax year is as follows.
(2) In the case of general earnings, the amount charged is the net taxable earnings from an employment in the year.
(3) That amount is calculated under section 11 by reference to any taxable earnings from the employment in the year (see section 10(2)).
(4) In the case of specific employment income, the amount charged is the net taxable specific income from an employment for the year.
(5) That amount is calculated under section 12 by reference to any taxable specific income from the employment for the year (see section 10(3)).
(6) Accordingly, no amount of employment income is charged to tax under this Part for a particular tax year unless—
(a) in the case of general earnings, they are taxable earnings from an employment in that year, or
(b) in the case of specific employment income, it is taxable specific income from an employment for that year.
10 Meaning of “taxable earnings” and “taxable specific income”
(1) This section explains what is meant by “taxable earnings” and “taxable specific income” in the employment income Parts.
(2) “Taxable earnings from an employment in a tax year are to be determined in accordance with Chapters 4 and 5 of this Part.
(3) “Taxable specific income from an employment for a tax year means the full amount of any specific employment income which, by virtue of Part 6 , 7 or 7A or any other enactment, counts as employment income for that year in respect of the employment.
(4) Subsection (3) is subject to Chapter 5B (taxable specific income from employment-related securities etc: internationally mobile employees).
(5) Subsection (3) is also subject to sections 554Z9 to 554Z11 (employment income under Part 7A: remittance basis).
(1) For the purposes of this Part the “net taxable earnings” from an employment in a tax year are given by the formula—
TE
-
DE
where—
TE means the total amount of any taxable earnings from the employment in the tax year, and
DE means the total amount of any deductions allowed from those earnings under provisions listed in section 327(3) to (5) (deductions from earnings: general).
(2) If the amount calculated under subsection (1) is negative, the net taxable earnings from the employment in the year are to be taken to be nil instead.
(3) Relief may be available under section 128 of ITA 2007 (set-off against general income)—
(a) where TE is negative, or
(b) in certain exceptional cases where the amount calculated under subsection (1) is negative.
(4) If a person has more than one employment in a tax year, the calculation under subsection (1) must be carried out in relation to each of the employments.
(1) For the purposes of this Part the “net taxable specific income” from an employment for a tax year is given by the formula—
TSI
-
DSI
where—
TSI means the amount of any taxable specific income from the employment for the tax year, and
DSI means the total amount of any deductions allowed from that income under provisions of the Tax Acts not included in the lists in section 327 (3) and (4) (deductions from earnings: general).
(2) If the amount calculated under subsection (1) is negative, the net taxable specific income from the employment for the year is to be taken to be nil instead.
(3) If a person has more than one kind of specific employment income from an employment for a tax year, the calculation under subsection (1) must be carried out in relation to each of those kinds of specific employment income; and in such a case the “net taxable specific income” from the employment for that year is the total of all the amounts so calculated.
(1) The person liable for any tax on employment income under this Part is the taxable person mentioned in subsection (2) or (3).
This is subject to subsection (4).
(2) If the tax is on general earnings, “the taxable person” is the person to whose employment the earnings relate.
(3) If the tax is on specific employment income, “the taxable person” is the person in relation to whom the income is, by virtue of Part 6 , 7 or 7A or any other enactment, to count as employment income.
(4) If the tax is on general earnings received, or remitted to the United Kingdom, after the death of the person to whose employment the earnings relate, the person’s personal representatives are liable for the tax.
(4A) If the tax is on specific employment income received, or remitted to the United Kingdom, after the death of the person in relation to whom the income is, by virtue of Part 7, to count as employment income, the person's personal representatives are liable for the tax.
(4B) Subject to section 554Z12, if—
(a) the tax is on specific employment income under Chapter 2 of Part 7A, and
(b) the relevant step is taken, or (if relevant) the income is remitted to the United Kingdom, after the death of A,
A's personal representatives are liable for the tax.
(4C) Terms used in subsection (4B) have the same meaning as in Part 7A.
(5) If subsection (4) , (4A) or (4B) or section 554Z12(3) applies, the tax is accordingly to be assessed on the personal representatives and is a debt due from and payable out of the estate.
14 Taxable earnings under this Chapter: introduction
(1) This Chapter sets out for the purposes of this Part what are taxable earnings from an employment in a tax year in cases where section 15 (earnings for year when employee UK resident) applies to general earnings for a tax year.
(2) In this Chapter—
(a) sections 16 and 17 deal with the year for which general earnings are earned, and
(b) sections 18 and 19 deal with the time when general earnings are received.
(3) In the employment income Parts any reference to the charging provisions of this Chapter is a reference to section 15.
(1) This section applies to general earnings for a tax year for which the employee is UK resident except that, in the case of a split year, it does not apply to any part of those earnings that is excluded.
(1A) General earnings are “excluded” if they—
(a) are attributable to the overseas part of the split year, and
(b) are neither—
(i) general earnings in respect of duties performed in the United Kingdom, nor
(ii) general earnings from overseas Crown employment subject to United Kingdom tax.
(2) The full amount of any general earnings within subsection (1) which are received in a tax year is an amount of “taxable earnings” from the employment in that year.
(3) Subsection (2) applies whether or not the employment is held when the earnings are received.
(4) Any attribution required for the purposes of subsection (1A)(a) is to be done on a just and reasonable basis.
(5) The following provisions of Chapter 5 of this Part apply for the purposes of subsection (1A)(b) as for the purposes of section 27(2)—
(a) section 28 (which defines “general earnings from overseas Crown employment subject to United Kingdom tax”), ...
(b) sections 38 to 41 (which contain rules for determining the place of performance of duties of employment) , and
(c) section 41ZA (which is about determining the extent to which general earnings are in respect of United Kingdom duties).
(6) Subject to any provision made in an order under section 28(5) for the purposes of subsection (1A)(b), provisions made in an order under that section for the purposes of section 27(2) apply for the purposes of subsection (1A)(b) too.
(1) This section applies for determining whether general earnings are general earnings “for” a particular tax year for the purposes of this Chapter.
(2) General earnings that are earned in, or otherwise in respect of, a particular period are to be regarded as general earnings for that period.
(3) If that period consists of the whole or part of a single tax year, the earnings are to be regarded as general earnings “for” that tax year.
(4) If that period consists of the whole or parts of two or more tax years, the part of the earnings that is to be regarded as general earnings “for” each of those tax years is to be determined on a just and reasonable apportionment.
(5) This section does not apply to any amount which is required by a provision of Part 3 to be treated as earnings for a particular tax year.
17 Treatment of earnings for year in which employment not held
(1) This section applies for the purposes of this Chapter in a case where general earnings from an employment would otherwise fall to be regarded as general earnings for a tax year in which the employee does not hold the employment.
(2) If that year falls before the first tax year in which the employment is held, the earnings are to be treated as general earnings for that first tax year.
(3) If that year falls after the last tax year in which the employment was held, the earnings are to be treated as general earnings for that last tax year.
(4) This section does not apply in connection with determining the year for which amounts are to be treated as earnings under Chapters 2 to 10 of Part 3 (the benefits code).
(1) General earnings consisting of money are to be treated for the purposes of this Chapter as received at the earliest of the following times—
Rule 1
The time when payment is made of or on account of the earnings.
Rule 2
The time when a person becomes entitled to payment of or on account of the earnings.
Rule 3
If the employee is a director of a company and the earnings are from employment with the company (whether or not as director), whichever is the earliest of—
(a) the time when sums on account of the earnings are credited in the company’s accounts or records (whether or not there is any restriction on the right to draw the sums);
(b) if the amount of the earnings for a period is determined by the end of the period, the time when the period ends;
(c) if the amount of the earnings for a period is not determined until after the period has ended, the time when the amount is determined.
(2) Rule 3 applies if the employee is a director of the company at any time in the tax year in which the time mentioned falls.
(3) In this section “director” means—
(a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that body,
(b) in relation to a company whose affairs are managed by a single director or similar person, that director or person, and
(c) in relation to a company whose affairs are managed by the members themselves, a member of the company,
and includes any person in accordance with whose directions or instructions the directors of the company (as defined above) are accustomed to act.
(4) For the purposes of subsection (3) a person is not to be regarded as a person in accordance with whose directions or instructions the directors of the company are accustomed to act merely because the directors act on advice given by that person in a professional capacity.
(5) Where this section applies—
(a) to a payment on account of general earnings, or
(b) to sums on account of general earnings,
it so applies for the purpose of determining the time when an amount of general earnings corresponding to the amount of that payment or those sums is to be treated as received for the purposes of this Chapter.
(1) General earnings not consisting of money are to be treated for the purposes of this Chapter as received at the following times.
(2) If an amount is treated as earnings for a particular tax year under any of the following provisions, the earnings are to be treated as received in that year—
section 81 (taxable benefits: cash vouchers),
section 94 or 94A (taxable benefits: credit-tokens),
Chapter 5 of Part 3 (taxable benefits: living accommodation),
Chapter 6 of Part 3 (taxable benefits: cars, vans and related benefits),
Chapter 7 of Part 3 (taxable benefits: loans),
...
...
Chapter 10 of Part 3 (taxable benefits: residual liability to charge),
section 222 (payments treated as earnings: payments on account of tax where deduction not possible),
section 223 (payments treated as earnings: payments on account of director’s tax).
section 226A (amount treated as earnings: employee shareholder shares). ,
(3) If an amount is treated as earnings under section 87 or 87A (taxable benefits: non-cash vouchers), the earnings are to be treated as received in the tax year mentioned in section 88.
(4) If subsection (2) or (3) does not apply, the earnings are to be treated as received at the time when the benefit is provided.
20 Taxable earnings under this Chapter: introduction
(1) This Chapter contains provision for determining how much of the following are taxable earnings from an employment in a tax year—
(a) general earnings that are for a tax year for which section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the employee (being a tax year before tax year 2025-26), and
(b) general earnings that are for a tax year for which the employee is non-UK resident.
(2) In this Chapter—
(a) sections 29 and 30 deal with the year for which general earnings are earned,
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) sections 38 to 41 deal with the place where the duties of an employment are performed.
(3) In the employment income Parts any reference to the charging provisions of this Chapter is a reference to any of sections 22, 26 and 27.
21 Earnings for year when employee resident and ordinarily resident, but not domiciled, in UK, except chargeable overseas earnings
(1) This section applies to general earnings for a tax year in which the employee is resident and ordinarily resident, but not domiciled, in the United Kingdom except to the extent that they are chargeable overseas earnings for that year.
(2) The full amount of any general earnings within subsection (1) which are received in a tax year is an amount of “taxable earnings” from the employment in that year.
(3) Subsection (2) applies—
(a) whether the earnings are for that year or for some other tax year, and
(b) whether or not the employment is held at the time when the earnings are received.
(4) Section 23 applies for calculating how much of an employee’s general earnings are “chargeable overseas earnings” for a tax year, and are therefore within section 22(1) rather than subsection (1) above.
22 Chargeable overseas earnings for year when remittance basis applied and employee outside section 26
(1) This section applies to general earnings for a tax year , to the extent that they are chargeable overseas earnings for that year, if—
(a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the employee for that year, and
(b) the employee did not meet the requirement of section 26A for that year.
(2) The full amount of any general earnings within subsection (1) which are remitted to the United Kingdom in a tax year is an amount of “taxable earnings” from the employment in that year.
(3) Subsection (2) applies whether or not the employment is held when the earnings are remitted.
(4) Section 23 applies for calculating how much of an employee’s general earnings are “chargeable overseas earnings” for a tax year ....
(5) Where any chargeable overseas earnings are taxable earnings under subsection (2), any deduction taken into account under section 23(3) in calculating the amount of the chargeable overseas earnings—
(a) cannot then be deducted under section 11 from those taxable earnings, but
(b) may be deducted under that section from any taxable earnings under section 15.
(6) See Chapter A1 of Part 14 of ITA 2007 for the meaning of “remitted to the United Kingdom” etc.
(7) Section 15(1) does not apply to general earnings within subsection (1).
(1) This section applies for calculating how much of an employee’s general earnings for a tax year are “chargeable overseas earnings” for the purposes of section 22.
(1A) But none of an employee's general earnings from an employment for a tax year are to be “chargeable overseas earnings” if section 24A applies in relation to the employment for the tax year.
(2) General earnings for a tax year are “overseas earnings” for that year if—
(a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the employee for that year,
(aa) the employee did not meet the requirement of section 26A for that year,
(b) the employment was with a foreign employer, and
(c) the duties of the employment were performed wholly outside the United Kingdom.
(3) To calculate the amount of “chargeable overseas earnings” for a tax year—
Step 1
Identify—
(a) in the case of a tax year that is not a split year, the full amount of the overseas earnings for that year, and
(b) in the case of a split year, so much of the full amount of the overseas earnings for that year as is attributable to the UK part of the year.
Step 2
Subtract any amounts that would (assuming they were taxable earnings) be allowed to be deducted from the earnings identified under step 1 under—
(a) section 232 or Part 5 (deductions allowed from earnings),
(b) sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or
(d) section 262 of CAA 2001 (capital allowances to be given effect by treating them as deductions from earnings).
Step 3
Apply any limit imposed by section 24 (limit where duties of associated employment performed in UK).
The result is the chargeable overseas earnings for the tax year.
(4) Any attribution required for the purposes of step 1 or step 2 in subsection (3) is to be done on a just and reasonable basis.
24 Limit on chargeable overseas earnings where duties of associated employment performed in UK
(1) This section imposes a limit on how much of an employee’s general earnings are chargeable overseas earnings for a tax year under section 23 if—
(a) in that year the employee holds associated employments as well as the employment to which subsection (2) of that section applies (“the relevant employment”), and
(b) the duties of the associated employments are not performed wholly outside the United Kingdom.
(2) The limit is the proportion of the aggregate earnings for that year from all the employments concerned that is reasonable having regard to—
(a) the nature of and time devoted to each of the following—
(i) the duties performed outside the United Kingdom, and
(ii) those performed in the United Kingdom, and
(b) all other relevant circumstances.
(2A) If the tax year is a split year as respects the employee, subsection (2) has effect as if for “the aggregate earnings for that year from all the employments concerned” there were substituted “ so much of the aggregate earnings for that year from all the employments concerned as is attributable to the UK part of that year ”.
(3) For the purposes of subsection (2) “the aggregate earnings for a year from all the employments concerned” means the amount produced by aggregating the full amount of earnings from each of those employments for the year mentioned in subsection (1) so far as remaining after subtracting any amounts of the kind mentioned in step 2 in section 23(3).
(3A) Any attribution required for the purposes of subsection (2A) is to be done on a just and reasonable basis.
(4) In this section—
(a) “the employments concerned” means the relevant employment and the associated employments;
(b) “associated employments” means employments with the same employer or with associated employers.
(5) The following rules apply to determine whether employers are associated—
Rule A
An individual is associated with a partnership or company if that individual has control of the partnership or company.
Rule B
A partnership is associated with another partnership or with a company if one has control of the other or both are under the control of the same person or persons.
Rule C
A company is associated with another company if one has control of the other or both are under the control of the same person or persons.
(6) In subsection (5)—
(a) in rules A and B “control” has the meaning given by section 995 of ITA 2007 (in accordance with section 719 of this Act), and
(b) in rule C “control” means control within the meaning given by sections 450 and 451 of CTA 2010 (meaning of expressions relating to close companies).
(7) If an amount of chargeable overseas earnings is reduced under step 3 in section 23(3) as a result of applying any limit imposed by this section, the amount of general earnings corresponding to the reduction remains an amount of general earnings within section 15(1).
(1) This section applies in relation to an employment (“the relevant employment”) for a tax year (“the relevant tax year”) if—
(a) one or more of the paragraphs in subsection (5) applies,
(b) conditions 1 to 4 are met, and
(c) condition 5 is not met.
(2) The consequences of this section applying are set out in sections 23(1A), 41C(4A), 41H(5) and 554Z9(1A).
(3) But, for the purpose of determining if, and the extent to which, any provision of Part 11 (PAYE), or of PAYE regulations, applies in relation to any income, the application of any provision mentioned in subsection (2) in relation to the income is to be ignored.
(4) In this section—
(a) “the relevant employee” means the employee in respect of the relevant employment,
(b) “the relevant employer” means the employer in respect of the relevant employment, and
(c) “UK employment” means an employment the duties of which are not performed wholly outside the United Kingdom and “UK employer” is to be read accordingly,
and the rules in section 24(5) (“associated” persons) apply for the purposes of this section.
(5) The paragraphs referred to in subsection (1)(a) are—
(a) general earnings from the relevant employment which are for the relevant tax year would, apart from section 23(1A) and step 3 in section 23(3), be “chargeable overseas earnings” under section 23(3);
(b) employment income in respect of the relevant employment which is treated as accruing in the relevant tax year under section 41C(2) would, apart from sections 41C(4A), 41D and 41E, be “foreign” under section 41C(3);
(c) employment income in respect of the relevant employment which is treated as accruing in the relevant tax year under section 41H(2) would, apart from sections 41H(5), 41I and 41L, be “chargeable foreign securities income” under section 41H(3);
(d) section 554Z9(2) would, apart from section 554Z9(1A) and (4) and (5), apply to employment income in respect of the relevant employment which corresponds to the value of a relevant step, or a part of the value of a relevant step, which is “for” the relevant tax year as determined under section 554Z4.
(6) Condition 1 is that the relevant employee holds a UK employment—
(a) at a time in the relevant tax year when the relevant employee also holds the relevant employment, or
(b) if the relevant tax year is a split year as respects the relevant employee, at a time in the UK part of the relevant tax year when the relevant employee also holds the relevant employment.
(7) Condition 2 is that the UK employer is the same as, or is associated with, the relevant employer.
(8) Condition 3 is that the UK employment and the relevant employment are related to each other.
(9) Without prejudice to the generality of subsection (8), the UK employment and the relevant employment are to be assumed to be related to each other if one or more of the following paragraphs applies—
(a) it is reasonable to suppose that—
(i) the relevant employee would not hold one employment without holding the other employment, or
(ii) the employments will cease at the same time or one employment will cease in consequence of the other employment ceasing;
(b) the terms of one employment operate to any extent by reference to the other employment;
(c) the performance of duties of one employment is (wholly or partly) dependent upon, or otherwise linked (directly or indirectly) to, the performance of duties of the other employment;
(d) the duties of the employments are wholly or mainly of the same type (ignoring the fact that they may be performed (wholly or partly) in different locations);
(e) the duties of the employments involve (wholly or partly) the provision of goods or services to the same customers or clients;
(f) the relevant employee is—
(i) a director (as defined in section 67) of the UK employer or the relevant employer who has a material interest (as defined in section 68) in the UK employer or the relevant employer,
(ii) a senior employee of the UK employer or the relevant employer, or
(iii) one of the employees of the UK employer or the relevant employer who receives the higher or highest levels of remuneration.
(10) In subsection (9)(f) references to the UK employer or the relevant employer include references to—
(a) any person with which the UK employer or the relevant employer (as the case may be) is associated, and
(b) if the UK employer or the relevant employer (as the case may be) is a company, the following companies taken together as if they were one company—
(i) the UK employer or the relevant employer (as the case may be), and
(ii) all the companies with which the UK employer or the relevant employer (as the case may be) is associated.
(11) The Treasury may by regulations amend this section so as to add to, reduce or modify the cases in which the UK employment and the relevant employment are to be assumed to be related to each other.
(12) A statutory instrument containing regulations under subsection (11) may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.
(13) Condition 4 is that X% is less than Y%.
(14) “X%” is given by the following formula—
C I × 100 %
See section 24B for the definitions of “C” and “I”.
(15) “Y%” is 65% of the additional rate for the relevant tax year.
(16) The Treasury may by regulations amend this section so as to amend the definition of “Y%”.
(17) Condition 5 is that—
(a) were the duties of the relevant employment to be duties of the UK employment instead, all or substantially all of them could not lawfully be performed in the relevant territory (whether on the meeting of any condition or otherwise) by virtue of any regulatory requirements imposed by or under the law of that territory, and
(b) were the UK duties of the UK employment to be duties of the relevant employment instead, all or substantially all of them could not lawfully be performed in the part of the United Kingdom in which they are performed (whether on the meeting of any condition or otherwise) by virtue of any regulatory requirements imposed by or under the law of that part of the United Kingdom.
(18) In subsection (17)—
“the relevant territory” means the territory in which the duties of the relevant employment are performed, and
“UK duties” means duties performed in the United Kingdom.
24B Definitions of “C” and “I” for the purposes of section 24A(14)
(1) This section applies for the purposes of section 24A(14).
(2) “C” is the total amount of credit which would be allowed under section 18(2) of TIOPA 2010 (double taxation relief by way of credit) against income tax in respect of all the employment income falling within section 24A(5)(a) to (d) were none of that income to be, as relevant—
(a) “chargeable overseas earnings”,
(b) “foreign”,
(c) “chargeable foreign securities income”, or
(d) income to which section 554Z9(2) applies.
(3) For this purpose, assume—
(a) that all relief is claimed within the applicable time limit given by section 19 of TIOPA 2010, and
(b) that all reasonable steps are taken to minimise any amounts of tax payable as mentioned in section 33 of that Act.
(4) “I” is the total amount of all the employment income falling within section 24A(5)(a) to (d).
26 Foreign earnings for year when remittance basis applied and employee met section 26A requirement
(1) This section applies to general earnings for a tax year where section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the employee for that year and the employee met the requirement of section 26A for that year, if the general earnings meet all of the following conditions—
(a) they are neither—
(i) general earnings in respect of duties performed in the United Kingdom, nor
(ii) general earnings from overseas Crown employment subject to United Kingdom tax, and
(b) if the tax year is a split year as respects the employee, they are attributable to the UK part of the year.
(2) The full amount of any general earnings within subsection (1) which are remitted to the United Kingdom in a tax year is an amount of “taxable earnings” from the employment in that year.
(3) Subsection (2) applies whether or not the employment is held when the earnings are remitted.
(4) Section 28 explains what is meant by “general earnings from overseas Crown employment subject to United Kingdom tax”.
(5) See Chapter A1 of Part 14 of ITA 2007 for the meaning of “remitted to the United Kingdom” etc.
(5A) Any attribution required for the purposes of subsection (1)(b) is to be done on a just and reasonable basis.
(6) Section 15(1) does not apply to general earnings within subsection (1).
26A Section 26: requirement for 3-year period of non-residence
(1) An employee meets the requirement of this section for a tax year if the employee was—
(a) non-UK resident for the previous 3 tax years, or
(b) UK resident for the previous tax year but non-UK resident for the 3 tax years before that, or
(c) UK resident for the previous 2 tax years but non-UK resident for the 3 tax years before that, or
(d) non-UK resident for the previous tax year, UK resident for the tax year before that and non-UK resident for the 3 tax years before that.
(2) The residence status of the employee before the 3 years of non-UK residence is not relevant for these purposes.
27 UK-based earnings for year when employee not resident in UK
(1) This section applies to general earnings for a tax year for which the employee is not resident in the United Kingdom if they are—
(a) general earnings in respect of duties performed in the United Kingdom that do not fall within paragraph (c), ...
(b) general earnings from overseas Crown employment subject to United Kingdom tax that do not fall within paragraph (c), or
(c) general earnings to which section 402B (termination payments, and other benefits, that cannot benefit from the section 403 threshold, to be treated as earnings) applies and which have been reduced by a claim for relief under section 414 (reduction in other cases of foreign service).
(2) The full amount of any general earnings within subsection (1) which are received in a tax year is an amount of “taxable earnings” from the employment in that year.
(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Subsection (2) applies whether or not the employment is held when the earnings are received.
(4) Section 28 explains what is meant by “general earnings from overseas Crown employment subject to United Kingdom tax”.
(5) Sections 18 and 19 (time when earnings are received) apply for the purposes of this section.
28 Meaning of “general earnings from overseas Crown employment subject to UK tax”
(1) This section explains for the purposes of sections 25 to 27 what is meant by “general earnings from overseas Crown employment subject to United Kingdom tax”.
(2) “Crown employment” means employment under the Crown—
(a) which is of a public nature, and
(b) the earnings from which are payable out of the public revenue of the United Kingdom or of Wales, Scotland or Northern Ireland.
(3) “General earnings from overseas Crown employment” means general earnings from such employment in respect of duties performed outside the United Kingdom.
(4) Such earnings are to be taken as being “subject to United Kingdom tax” unless they fall within any exception contained in an order under subsection (5).
(5) the Commissioners for Her Majesty’s Revenue and Customs may make an order excepting from the operation of sections 25(2) and 27(2)—
(a) general earnings of any description of employee specified in the order;
(b) general earnings from any description of employment so specified.
(6) The Commissioners may make the order if they consider that such earnings should not be subject to those provisions having regard to the international obligations of Her Majesty’s Government and such other matters as appear to them to be relevant.
(7) An order may make provision by reference to all or any of the following—
(a) the residence or nationality of the employee;
(b) whether the employee was engaged in or outside the United Kingdom;
(c) the nature of the post, the rate of remuneration and any other terms and conditions applying to it.
(8) Subsection (7) does not affect the generality of the power to make provision by reference to such factors as the Board consider appropriate.
(1) This section applies for determining whether general earnings are general earnings “for” a particular tax year for the purposes of this Chapter.
(2) General earnings that are earned in, or otherwise in respect of, a particular period are to be regarded as general earnings for that period.
(3) If that period consists of the whole or part of a single tax year, the earnings are to be regarded as general earnings “for” that tax year.
(4) If that period consists of the whole or parts of two or more tax years, the part of the earnings that is to be regarded as general earnings “for” each of those tax years is to be determined on a just and reasonable apportionment.
(5) This section does not apply to any amount which is required by a provision of Part 3 to be treated as earnings for a particular tax year.
30 Treatment of earnings for year in which employment not held
(1) This section applies for the purposes of this Chapter in a case where general earnings from an employment would otherwise fall to be regarded as general earnings for a tax year in which the employee does not hold the employment.
(2) If that year falls before the first tax year in which the employment is held, the earnings are to be treated as general earnings for that first tax year.
(3) If that year falls after the last tax year in which the employment was held, the earnings are to be treated as general earnings for that last tax year.
(4) This section does not apply in connection with determining the year for which amounts are to be treated as earnings under Chapters 2 to 10 of Part 3 (the benefits code).
(1) Subsection (2) applies if a person ordinarily performs the whole or part of the duties of an employment in the United Kingdom.
(2) General earnings for a period of absence from the employment are to be treated for the purposes of this Chapter as general earnings for duties performed in the United Kingdom except in so far as they would, but for that absence, have been general earnings for duties performed outside the United Kingdom.
(3) If and to the extent that general earnings for a period of absence from an employment are not treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom, the general earnings are to be treated for the purposes of this Chapter as general earnings in respect of duties performed outside the United Kingdom.
(4) For the purposes of this section references to “general earnings for a period of absence” do not include any general earnings to which section 221A (cancelled, moved or curtailed shift) applies (see section 38A).
(1) This section applies for determining the extent to which general earnings that relate to duties that were not performed are to be treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom.
(2) For the purposes of this section—
(a) “general earnings” means an amount of general earnings specified in the first column of the table, and
(b) the “duties that were not performed”, in relation to general earnings, means the duties specified in the corresponding entry in the second column of the table.
General earnings | Duties that were not performed
General earnings to which section 221A (cancelled, moved or curtailed shift) applies | The duties that it is reasonable to assume would have been performed during the shift but were not performed because of the shift’s cancellation, movement or curtailment
General earnings to which section 402B (termination payments etc) applies | The duties that it is reasonable to assume would have been performed during the post-employment notice period as defined by section 402E if the employee’s employment had not been terminated until the end of that period
General earnings which consist of a payment in lieu of notice to which Chapter 3 of Part 6 (termination payments etc). does not apply | The duties that it is reasonable to assume would have been performed during the notice period if the employee’s employment had not been terminated until the end of that period
Any other general earnings in respect of duties that an employee does not perform other than any general earnings for a period of absence from employment | The duties that the employee does not perform
(3) Subsection (4) applies to the general earnings from an employment for a tax year if—
(a) it is reasonable to assume that some or all of the duties that were not performed would have been performed in the United Kingdom, or
(b) any duties of the employment performed during that tax year are performed wholly or partly in the United Kingdom.
(4) The general earnings are to be treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom except in so far as, had the duties that were not performed been performed, general earnings in respect of those duties would have been general earnings for duties performed outside the United Kingdom.
(5) If and to the extent that the general earnings are not treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom, the general earnings are to be treated for the purposes of this Chapter as general earnings in respect of duties performed outside the United Kingdom.
39 Duties in UK merely incidental to duties outside UK
(1) This section applies if in a tax year an employment is in substance one whose duties fall to be performed outside the United Kingdom.
(2) Duties of the employment performed in the United Kingdom whose performance is merely incidental to the performance of duties outside the United Kingdom are to be treated for the purposes of this Chapter as performed outside the United Kingdom.
(3) This section does not affect any question as to—
(a) where any duties are performed, or
(b) whether a person is absent from the United Kingdom,
for the purposes of section 378 (deduction from seafarers' earnings: eligibility), and section 383 (place of performance of incidental duties) applies instead.
(1) Duties which a person performs on a vessel engaged on a voyage not extending to a port outside the United Kingdom are to be treated for the purposes of this Chapter as performed in the United Kingdom.
(2) Duties which a person resident in the United Kingdom performs on a vessel or aircraft engaged—
(a) on a voyage or journey beginning or ending in the United Kingdom, or
(b) on a part beginning or ending in the United Kingdom of any other voyage or journey,
are to be treated as performed in the United Kingdom for the purposes of this Chapter.
(3) Subsection (2) does not, however, apply for the purposes of section 24(1)(b) (limit on chargeable overseas earnings under section 23 where duties of associated employment performed in UK) in relation to any duties of a person’s employment if—
(a) the employment is as a seafarer, and
(b) the duties are performed on a ship.
(4) Instead, any duties of the employment which are performed on a ship engaged—
(a) on a voyage beginning or ending outside the United Kingdom (but excluding any part of it beginning and ending there), or
(b) on a part beginning or ending outside the United Kingdom of any other voyage,
are to be treated as performed outside the United Kingdom for the purposes of section 24(1)(b).
(5) For the purposes of subsections (3) and (4)—
(a) employment “as a seafarer” means an employment consisting of the performance of duties on a ship or of such duties and others incidental to them;
(b) “ship” does not include an offshore installation;
(c) the areas designated under section 1(7) of the Continental Shelf Act 1964 (c. 29) are treated as part of the United Kingdom.
(1) General earnings in respect of duties performed in the UK sector of the continental shelf in connection with exploration or exploitation activities are to be treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom.
(2) In this section—
“the UK sector of the continental shelf” means the areas designated under section 1(7) of the Continental Shelf Act 1964, and
“exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of so much of the seabed and subsoil and their natural resources as is situated in the United Kingdom or the UK sector of the continental shelf.
The extent to which general earnings are in respect of duties performed in the United Kingdom is to be determined under this Chapter on a just and reasonable basis.