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Employees resident, ordinarily resident and domiciled in UK | |
15 Earnings for year when employee resident, ordinarily resident and domiciled | |
in UK | |
(1) This section applies to general earnings for a tax year in which the employee is | |
resident, ordinarily resident and domiciled in the United Kingdom. | 5 |
(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 | 10 |
(b) whether or not the employment is held at the time when the earnings | |
are received. | |
Year for which general earnings are earned | |
16 Meaning of earnings “for” a tax year | |
(1) This section applies for determining whether general earnings are general | 15 |
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. | 20 |
(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. | 25 |
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 | 30 |
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 11 of Part 3 (the | 35 |
benefits code). | |
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When general earnings are received | |
18 Receipt of money earnings | |
(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 | 5 |
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 | 10 |
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 | 15 |
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. | 20 |
(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, | 25 |
(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 | 30 |
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. | 35 |
(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 | 40 |
is to be treated as received for the purposes of this Chapter. | |
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19 Receipt of non-money earnings | |
(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— | 5 |
section 81 (taxable benefits: cash vouchers), | |
section 94 (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), | 10 |
Chapter 8 of Part 3 (taxable benefits: notional loans in respect of | |
acquisitions of shares), | |
Chapter 9 of Part 3 (taxable benefits: disposals of shares for more than | |
market value), | |
Chapter 10 of Part 3 (taxable benefits: residual liability to charge), | 15 |
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). | |
(3) If an amount is treated as earnings under section 87 (taxable benefits: non-cash | 20 |
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. | |
Chapter 5 | 25 |
Taxable earnings: rules applying to employee resident, ordinarily resident or | |
domiciled outside UK | |
Taxable earnings | |
20 Taxable earnings under this Chapter: introduction | |
(1) This Chapter sets out for the purposes of this Part what are taxable earnings | 30 |
from an employment in a tax year in cases where any of the following sections | |
applies to general earnings for a tax year— | |
(a) section 21 (earnings for year when employee resident and ordinarily | |
resident, but not domiciled, in UK, except chargeable overseas | |
earnings), | 35 |
(b) section 22 (chargeable overseas earnings for year when employee | |
resident and ordinarily resident, but not domiciled, in UK), | |
(c) section 25 (UK-based earnings for year when employee resident, but | |
not ordinarily resident, in UK), | |
(d) section 26 (foreign earnings for year when employee resident, but not | 40 |
ordinarily resident, in UK), | |
(e) section 27 (UK-based earnings for year when employee not resident in | |
UK). | |
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(2) In this Chapter— | |
(a) sections 29 and 30 deal with the year for which general earnings are | |
earned, | |
(b) sections 31 to 34 deal with the time when general earnings are received | |
or remitted, | 5 |
(c) sections 35 to 37 deal with relief for delayed remittances, and | |
(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 the sections listed in subsection (1). | 10 |
Employees resident and ordinarily resident in UK | |
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 | 15 |
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— | 20 |
(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 | 25 |
section 22(1) rather than subsection (1) above. | |
22 Chargeable overseas earnings for year when employee resident and | |
ordinarily resident, but not domiciled, in UK | |
(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 to | 30 |
the extent that the earnings are chargeable overseas earnings 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— | 35 |
(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 remitted; | |
but that subsection has effect subject to any relief given under section 35 | |
(delayed remittances: claim for relief). | 40 |
(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 | |
subsection (1) rather than section 21(1). | |
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(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 | 5 |
(b) may be deducted under that section from any taxable earnings under | |
section 21. | |
23 Calculation of “chargeable overseas earnings” | |
(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 | 10 |
sections 21 and 22. | |
(2) General earnings for a tax year are “overseas earnings” for that year if— | |
(a) in that year the employee is resident and ordinarily resident, but not | |
domiciled, in the United Kingdom, | |
(b) the employment is with a foreign employer, and | 15 |
(c) the duties of the employment are performed wholly outside the United | |
Kingdom. | |
(3) To calculate the amount of “chargeable overseas earnings” for a tax year— | |
| |
Step 1 | 20 |
Identify the full amount of the overseas earnings for that year under subsection | |
(2). | |
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Step 2 | |
Subtract any amounts that would (assuming they were taxable earnings) be | 25 |
allowed to be deducted from those earnings under— | |
(a) section 232 or Part 5 (deductions allowed from earnings), | |
(b) section 262 of CAA 2001 (capital allowances to be given effect by | |
treating them as deductions from earnings), | |
(c) section 592(7) of ICTA (contributions to exempt approved schemes), or | 30 |
(d) section 594 of ICTA (contributions to exempt statutory schemes). | |
| |
Step 3 | |
Apply any limit imposed by section 24 (limit where duties of associated | |
employment performed in UK). | 35 |
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The result is the chargeable overseas earnings for the tax year. | |
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 | 40 |
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 | 45 |
outside the United Kingdom. | |
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(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 | 5 |
(b) all other relevant circumstances. | |
(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 | 10 |
of the kind mentioned in step 2 in section 23(3). | |
(4) In this section— | |
(a) “the employments concerned” means the relevant employment and the | |
associated employments; | |
(b) “associated employments” means employments with the same | 15 |
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. | 20 |
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 | 25 |
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 840 of ICTA | |
(in accordance with section 719 of this Act); and | 30 |
(b) in rule C “control” means control within the meaning of section 416 of | |
ICTA (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 | 35 |
earnings within section 21(1). | |
Employees resident but not ordinarily resident in UK | |
25 UK-based earnings for year when employee resident, but not ordinarily | |
resident, in UK | |
(1) This section applies to general earnings for a tax year in which the employee is | 40 |
resident but not ordinarily resident in the United Kingdom if they are— | |
(a) general earnings in respect of duties performed in the United Kingdom, | |
or | |
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|
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| |
(b) 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. | 5 |
(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 28 explains what is meant by “general earnings from overseas Crown | 10 |
employment subject to United Kingdom tax”. | |
26 Foreign earnings for year when employee resident, but not ordinarily | |
resident, in UK | |
(1) This section applies to general earnings for a tax year in which the employee is | |
resident, but not ordinarily resident, in the United Kingdom if they are | 15 |
neither— | |
(a) general earnings in respect of duties performed in the United Kingdom, | |
nor | |
(b) general earnings from overseas Crown employment subject to United | |
Kingdom tax. | 20 |
(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— | |
(a) whether the earnings are for that year or for some other tax year, and | 25 |
(b) whether or not the employment is held at the time when the earnings | |
are remitted; | |
but that subsection has effect subject to any relief given under section 35 | |
(delayed remittances: claim for relief). | |
(4) Section 28 explains what is meant by “general earnings from overseas Crown | 30 |
employment subject to United Kingdom tax”. | |
Employees not resident in UK | |
27 UK-based earnings for year when employee not resident in UK | |
(1) This section applies to general earnings for a tax year in which the employee is | |
not resident in the United Kingdom if they are— | 35 |
(a) general earnings in respect of duties performed in the United Kingdom, | |
or | |
(b) general earnings from overseas Crown employment subject to United | |
Kingdom tax. | |
(2) The full amount of any general earnings within subsection (1) which are | 40 |
received in a tax year is an amount of “taxable earnings” from the employment | |
in that year. | |
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