PT 55 - Overseas Aspects of Employment Income

Question 1

The way in which employment income is taxed depends on:

Answer 1

the residence and domicile status of the employee and
where the employment duties are performed

Question 2

Earnings will be taxed when ….

Answer 2

they are received (‘receipts basis’) or when they are brought
into or enjoyed in the UK (‘remittance basis’) if a remittance basis claim is made.

Question 3

If the remittance basis is claimed, it applies in respect of earnings for overseas duties
performed by a non-domiciled employee if:

Answer 3

• overseas workday relief (OWR) is available; or
• the employee works for a foreign employer and all the employment duties are
  performed outside the UK

Question 4

An employee is eligible for OWR in …

Answer 4

any of the three tax years immediately following three consecutive years of non-residence.

Question 5

OWR apportions earnings between UK and non-UK duties based on….

Answer 5

the number of UK and
overseas workdays in the tax year. Earnings attributable to non-UK duties are taxable on a
remittance basis.

Question 6

Where OWR is claimed, the employee can nominate …

Answer 6

an overseas bank account as a
‘qualifying account’ and apply the ‘special mixed fund’ rules to determine remittances
from that account.

Question 7

Under the special mixed fund rules

Answer 7

UK employment income is remitted first and the taxpayer can total up all remittances to the UK for the tax year and treat that as a single remittance at the end of the year.

Question 8

INCIDENTAL DUTIES

Answer 8

Duties which are performed in the UK but which are ‘merely incidental’ to those performed overseas are not treated as UK duties and do not give rise to liability.