|
| |
|
| |
53 (1) | “The overseas part” of a split year is the part of that year defined below— |
| |
(a) | for the Case in question, or |
| |
(b) | if the taxpayer’s circumstances fall within more than one Case, for |
| |
the Case which has priority (see paragraphs 54 and 55). |
| 5 |
(2) | For Case 1, the overseas part is— |
| |
(a) | if there is only one period falling within paragraph 44(3), the part |
| |
beginning with the first day of that period, and |
| |
(b) | if there is more than one such period, the part beginning with the first |
| |
day of the longest of those periods. |
| 10 |
(3) | For Case 2, the overseas part is the part beginning with the deemed |
| |
departure day as defined in paragraph 45(7) and (8). |
| |
(4) | For Case 3, the overseas part is the part beginning with the day mentioned |
| |
| |
(5) | For Case 4, the overseas part is the part before the day mentioned in |
| 15 |
| |
(6) | For Case 5, the overseas part is— |
| |
(a) | if there is only one period falling within paragraph 48(3), the part |
| |
before that period begins, and |
| |
(b) | if there is more than one such period, the part before the first of those |
| 20 |
| |
(7) | For Case 6, the overseas part is— |
| |
(a) | if there is only one period falling within paragraph 49(3), the part |
| |
ending with the last day of that period, and |
| |
(b) | if there is more than one such period, the part ending with the last |
| 25 |
day of the longest of those periods. |
| |
(8) | For Case 7, the overseas part is the part before the deemed arrival day as |
| |
defined in paragraph 50(7) and (8). |
| |
(9) | For Case 8, the overseas part is the part before the day mentioned in |
| |
| 30 |
Priority between Cases 1 to 3 |
| |
54 (1) | This paragraph applies to determine which Case has priority where the |
| |
taxpayer’s circumstances for the relevant year fall within two or all of the |
| |
| |
Case 1 (starting full-time work overseas); |
| 35 |
Case 2 (the partner of someone starting full-time work overseas); |
| |
Case 3 (ceasing to have a home in the UK). |
| |
(2) | Case 1 has priority over Case 2 and Case 3. |
| |
(3) | Case 2 has priority over Case 3. |
| |
|
| |
|
| |
|
Priority between Cases 4 to 8 |
| |
55 (1) | This paragraph applies to determine which Case has priority where the |
| |
taxpayer’s circumstances for the relevant year fall within two or more of the |
| |
| |
Case 4 (starting to have a home in the UK only); |
| 5 |
Case 5 (starting full-time work in the UK); |
| |
Case 6 (ceasing full-time work overseas); |
| |
Case 7 (the partner of someone ceasing full-time work overseas); |
| |
Case 8 (starting to have a home in the UK). |
| |
(2) | In this paragraph “the split year date” in relation to a Case means the final |
| 10 |
day of the part of the relevant year defined in paragraph 53(5) to (9) for that |
| |
| |
| |
(a) | if Case 5 also applies and the split year date in relation to Case 5 is |
| |
earlier than the split year date in relation to Case 6, Case 5 has |
| 15 |
| |
(b) | otherwise, Case 6 has priority. |
| |
(4) | If Case 7 (but not Case 6) applies— |
| |
(a) | if Case 5 also applies and the split year date in relation to Case 5 is |
| |
earlier than the split year date in relation to Case 7, Case 5 has |
| 20 |
| |
(b) | otherwise, Case 7 has priority |
| |
(5) | If two or all of Cases 4, 5 and 8 apply (but neither Case 6 nor Case 7), the Case |
| |
which has priority is the one with the earliest split year date. |
| |
(6) | But if, in a case to which sub-paragraph (5) applies, two or all of the Cases |
| 25 |
which apply share the same split year date and that date is the only, or |
| |
earlier, split year date of the Cases which apply, the Cases with that split |
| |
year date are to be treated as having priority. |
| |
| |
56 | “The UK part” of a split year is the part of that year that is not the overseas |
| 30 |
| |
Special charging rules for employment income |
| |
57 | ITEPA 2003 is amended as follows. |
| |
58 (1) | In section 15 (earnings for year when employee UK resident), for subsection |
| |
| 35 |
“(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 |
| 40 |
| |
(i) | general earnings in respect of duties performed in the |
| |
| |
|
| |
|
| |
|
(ii) | general earnings from overseas Crown employment |
| |
subject to United Kingdom tax.” |
| |
(2) | After subsection (3) insert— |
| |
“(4) | Any attribution required for the purposes of subsection (1A)(a) is to |
| |
be done on a just and reasonable basis. |
| 5 |
(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”), and |
| |
(b) | sections 38 to 41 (which contain rules for determining the |
| 10 |
place of performance of duties of employment). |
| |
(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.” |
| 15 |
59 | In section 22 (chargeable overseas earnings for year when remittance basis |
| |
applies and employee outside section 26), for subsection (7) substitute— |
| |
“(7) | Section 15(1) does not apply to general earnings within subsection |
| |
| |
60 (1) | Section 23 (calculation of “chargeable overseas earnings”) is amended as |
| 20 |
| |
(2) | In subsection (3), for step 1 substitute— |
| |
| |
| |
(a) | in the case of a tax year that is not a split year, the full |
| 25 |
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.” |
| |
(3) | In that subsection, in step 2, for “those earnings” substitute “the earnings |
| 30 |
identified under step 1”. |
| |
(4) | After that subsection insert— |
| |
“(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.” |
| |
61 (1) | Section 24 (limit on chargeable overseas earnings where duties of associated |
| 35 |
employment performed in UK) is amended as follows. |
| |
(2) | After subsection (2) insert— |
| |
“(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 |
| 40 |
aggregate earnings for that year from all the employments concerned |
| |
as is attributable to the UK part of that year”.” |
| |
|
| |
|
| |
|
(3) | After subsection (3) insert— |
| |
“(3A) | Any attribution required for the purposes of subsection (2A) is to be |
| |
done on a just and reasonable basis.” |
| |
62 (1) | Section 26 (foreign earnings for year when remittance basis applies and |
| |
employee meets section 26A requirement) is amended as follows. |
| 5 |
(2) | In subsection (1), for the words from “if the general earnings” to the end |
| |
substitute “if the general earnings meet all of the following conditions— |
| |
| |
(i) | general earnings in respect of duties performed in the |
| |
| 10 |
(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.” |
| |
(3) | After subsection (5) insert— |
| 15 |
“(5A) | Any attribution required for the purposes of subsection (1)(b) is to be |
| |
done on a just and reasonable basis.” |
| |
(4) | For subsection (6) substitute— |
| |
“(6) | Section 15(1) does not apply to general earnings within subsection |
| |
| 20 |
63 | In section 232 (giving effect to mileage allowance relief), after subsection (6) |
| |
| |
“(6A) | If the earnings from which a deduction allowed under this section is |
| |
deductible include earnings that are “excluded” within the meaning |
| |
| 25 |
(a) | the amount of the deduction allowed is a proportion of the |
| |
amount that would be allowed under this section if the tax |
| |
year were not a split year, and |
| |
(b) | that proportion is equal to the proportion that the part of the |
| |
earnings that is not “excluded” bears to the total earnings.” |
| 30 |
64 (1) | Section 329 (deduction from earnings not to exceed earnings) is amended as |
| |
| |
(2) | After subsection (1) insert— |
| |
“(1A) | If the earnings from which a deduction allowed under this Part is |
| |
deductible include earnings that are “excluded” within the meaning |
| 35 |
| |
(a) | the amount of the deduction allowed is a proportion of the |
| |
amount that would be allowed under this Part if the tax year |
| |
were not a split year, and |
| |
(b) | that proportion is equal to the proportion that the part of the |
| 40 |
earnings that is not “excluded” bears to the total earnings.” |
| |
(3) | In subsection (2), after “those earnings” insert “(or, in a case within |
| |
subsection (1A), the part of those earnings that is not “excluded”)”. |
| |
|
| |
|
| |
|
(4) | In subsection (3), after “the earnings” insert “(or, in a case within subsection |
| |
(1A), the part of the earnings that is not “excluded”)”. |
| |
65 (1) | Section 394 (charge on employer-financed retirement benefits) is amended |
| |
| |
(2) | In subsection (4C), omit “or” at the end of paragraph (b) and after that |
| 5 |
| |
“(ba) | an amount which would count as employment income of the |
| |
employee or former employee under that Chapter but for the |
| |
application of section 554Z5 (overlap with earlier relevant |
| |
| 10 |
(3) | In that subsection, for paragraph (c) substitute— |
| |
“(c) | an amount which would be within paragraph (a), (b) or (ba) |
| |
| |
(i) | the employee or former employee having been non- |
| |
UK resident for any tax year, or |
| 15 |
(ii) | any tax year having been a split year as respects the |
| |
employee or former employee.” |
| |
66 (1) | Section 421E (income relating to securities: exclusions about residence etc) is |
| |
| |
(2) | For subsection (1) substitute— |
| 20 |
“(1) | Chapters 2, 3 and 4 do not apply in relation to employment-related |
| |
securities if the acquisition occurs in a tax year that is not a split year |
| |
as respects the employee and— |
| |
(a) | the earnings from the employment for that tax year are not |
| |
general earnings to which section 15, 22 or 26 applies |
| 25 |
(earnings for year when employee UK resident), or |
| |
(b) | had there been any earnings from the employment for that |
| |
tax year, they would not have been general earnings to which |
| |
any of those sections applied. |
| |
(1A) | Chapters 2, 3 and 4 do not apply in relation to employment-related |
| 30 |
securities if the acquisition occurs in the UK part of a tax year that is |
| |
a split year as respects the employee and— |
| |
(a) | the earnings from the employment attributable to that part of |
| |
the year are not general earnings to which section 15, 22 or 26 |
| |
| 35 |
(b) | had there been any earnings from the employment |
| |
attributable to that part of the year, they would not have been |
| |
general earnings to which any of those sections applied. |
| |
(1B) | Chapters 2, 3 and 4 do not apply in relation to employment-related |
| |
securities if the acquisition occurs in the overseas part of a tax year |
| 40 |
that is a split year as respects the employee.” |
| |
(3) | After subsection (2) insert— |
| |
“(2A) | But Chapters 3A to 3D do apply in relation to employment-related |
| |
securities in relation to which they are disapplied by subsection (2) |
| |
| 45 |
(a) | the acquisition takes place in the overseas part of a tax year |
| |
that is a split year as respects the employee, |
| |
|
| |
|
| |
|
(b) | the tax year is a split year because the circumstances of the |
| |
case fall within Case 1, Case 2 or Case 3 as described in Part 3 |
| |
of Schedule 43 to FA 2013 (split year treatment: cases |
| |
involving actual or deemed departure from the United |
| |
| 5 |
(c) | had it not been a split year— |
| |
(i) | the earnings from the employment for that tax year |
| |
(or some of them) would have been general earnings |
| |
to which section 15, 22 or 26 applied, or |
| |
(ii) | if there had been any earnings from the employment |
| 10 |
for that tax year, they (or some of them) would have |
| |
been general earnings to which any of those sections |
| |
| |
67 | In section 474 (cases where Chapter 5 of Part 7 does not apply), for |
| |
subsection (1) substitute— |
| 15 |
“(1) | This Chapter (apart from sections 473 and 483) does not apply in |
| |
relation to an employment-related securities option if the acquisition |
| |
occurs in a tax year that is not a split year as respects the employee |
| |
| |
(a) | the earnings from the employment are not general earnings |
| 20 |
to which section 15, 22 or 26 applies (earnings for year when |
| |
employee UK resident), or |
| |
(b) | had there been any earnings from the employment, they |
| |
would not have been general earnings to which any of those |
| |
| 25 |
(1A) | This Chapter (apart from sections 473 and 483) does not apply in |
| |
relation to an employment-related securities option if the acquisition |
| |
occurs in the UK part of a tax year that is a split year as respects the |
| |
| |
(a) | the earnings from the employment attributable to that part of |
| 30 |
the year are not general earnings to which section 15, 22 or 26 |
| |
applies (earnings for year when employee UK resident), or |
| |
(b) | had there been any earnings from the employment |
| |
attributable to that part of the year, they would not have been |
| |
general earnings to which any of those sections applied. |
| 35 |
(1B) | This Chapter (apart from sections 473 and 483) does not apply in |
| |
relation to an employment-related securities option if the acquisition |
| |
occurs in the overseas part of a tax year that is a split year as respects |
| |
| |
68 (1) | Section 554Z4 (residence issues) is amended as follows. |
| 40 |
(2) | For subsections (3) to (5) substitute— |
| |
“(3) | Subsection (4) applies if the value of the relevant step, or a part of it, |
| |
| |
(a) | a tax year for which A is non-UK resident, or |
| |
(b) | a tax year that is a split year as respects A. |
| 45 |
(4) | The value, or the part of it, is to be reduced— |
| |
(a) | in a case within subsection (3)(a), by so much of the value, or |
| |
the part of it, as is not in respect of UK duties, and |
| |
|
| |
|
| |
|
(b) | in a case within subsection (3)(b), by so much of the value, or |
| |
the part of it, as is both— |
| |
(i) | attributable to the overseas part of the tax year, and |
| |
(ii) | not in respect of UK duties. |
| |
| 5 |
(a) | the value, or the part of it, is not in respect of UK duties, or |
| |
(b) | so much of the value, or the part of it, as is attributable to the |
| |
overseas part of the tax year is not in respect of UK duties, |
| |
| is to be determined on a just and reasonable basis.” |
| |
(3) | After subsection (5) insert— |
| 10 |
“(5A) | Any attribution required for the purposes of subsection (4)(b)(i) is to |
| |
be done on a just and reasonable basis. |
| |
(5B) | “UK duties” means duties performed in the United Kingdom.” |
| |
69 | In section 554Z6 (overlap with certain earnings), in subsection (1)(a), after |
| |
“UK resident” insert “(and, in the case of a tax year that is a split year as |
| 15 |
respects A, are not “excluded” by virtue of section 15(1A)(a) and (b)(i))”. |
| |
70 | In section 554Z9 (remittance basis: A is ordinarily UK resident), in |
| |
| |
(a) | in paragraph (b), after “that income” insert “(or of so much of it as is |
| |
attributable to the UK part of the relevant tax year, if it was a split |
| 20 |
year as respects A)”, and |
| |
(b) | in paragraph (c), after “tax year” insert “(or the UK part of it)”. |
| |
71 (1) | Section 554Z10 (remittance basis: A is not ordinarily resident) is amended as |
| |
| |
(2) | In subsection (1), for paragraph (a) substitute— |
| 25 |
“(a) | the value of the relevant step, or a part of it, is “for” a tax year |
| |
(“the relevant tax year”) as determined under section |
| |
| |
(3) | For subsection (2) substitute— |
| |
“(2) | The overseas portion of (as the case may be)— |
| 30 |
(a) | A’s employment income by virtue of section 554Z2(1), or |
| |
(b) | the relevant part of A’s employment income by virtue of that |
| |
| |
| is “taxable specific income” in a tax year so far as the overseas portion |
| |
is remitted to the United Kingdom in that year.” |
| 35 |
(4) | After that subsection insert— |
| |
“(2A) | “The overseas portion” of A’s employment income by virtue of |
| |
section 554Z2(1), or of the relevant part of that income, is so much of |
| |
that income, or of the relevant part of it, as is not in respect of UK |
| |
| 40 |
(2B) | “UK duties” means duties performed in the United Kingdom.” |
| |
(5) | In subsection (3), for “this purpose” substitute “the purposes of this section”. |
| |
|
| |
|