Foreign employment

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Foreign employment
  • Introduction
  • Travel and subsistence reliefs
  • Termination payments
  • Special rules for non-domiciliaries
  • Overseas workday relief
  • Reporting requirements for foreign employments
  • Special cases

Introduction

An employee who works overseas may be entitled to extra reliefs and exemptions. This guidance note covers:

  • reliefs for travel and subsistence when travelling overseas
  • exemptions for termination payments made to individuals who have worked overseas for part or all of their employment
  • special rules that may apply to UK resident, but non-domiciled, employees
  • special rules for employees in the first three years of residence (known as overseas workday relief)

It does not cover the position where an individual leaves the UK to work overseas. This is dealt with in the Residence - issues on leaving the UK (2013/14 onwards) and Reporting requirements on leaving the UK guidance notes. In addition, the Leaving the UK - UK source income, Temporary non-residence and Capital gains tax on leaving the UK guidance notes may be useful.

Remember, for tax purposes, the UK territories of the Isle of Man, Jersey and Guernsey are classed as overseas.

For further discussion of the meaning of 'foreign earnings', see Simon's Taxes E5.305 (subscription sensitive).

Travel and subsistence reliefs
General rules on travel and subsistence

Employees are not taxed on the reimbursement of business travel and / or subsistence costs. For years up to 2016/17, if the employer does not have a dispensation in place, these expenses are reported on the employee's form P11D  and the employee must make a claim to HMRC for a deduction. The claim can be made either by entering the figure in box 17 of the Employment supplementary pages  to the Tax Return or by completing form P87  and submitting this to HMRC. The same claim for relief is possible where the expenses are not reimbursed by the employer.

For

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