Foreign employment ― dual contracts

Produced by Tolley

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

  • Foreign employment ― dual contracts
  • Introduction
  • Why use a dual contract?
  • Structuring a dual contract arrangement
  • Considerations
  • Key elements
  • Anti-avoidance legislation
  • Limit on chargeable overseas earnings
  • Restriction on the remittance basis from 6 April 2014
  • HMRC’s historic approach to dual contracts
  • More...

Foreign employment ― dual contracts


Employees may have two contracts of employment, one with an employer who is not resident in the UK, and one with a UK resident employer.

It is of course sometimes the case that these employers are unconnected, and the individual has simply accepted two posts, one abroad and one in the UK. For instance, a person might be employed by Oxford University and by the Sorbonne, with different responsibilities under each contract.

Often, however, the employers are associated, with the employee’s duties divided into those relating to an overseas employment and those related to the UK employment. Historically, this type of dual contract was particularly common when the individual was non-domiciled, and in some cases they were also used by not ordinarily resident individuals (prior to the concept of ordinary residence being abolished).

This guidance note explains why dual contracts are attractive to those who are non-domiciled and not deemed domiciled in the UK. It also sets out best practice when setting up dual contracts, discusses the anti-avoidance legislation which may be used to counter them and describes HMRC’s approach. The Foreign employment guidance note explains the background to these topics.

This guidance note does not consider overseas workday relief, as to obtain this relief the UK duties and foreign duties must be under the same contract of employment. See the Overseas workday relief and special mixed fund rules guidance note.

Also, this guidance note does not cover employment law or any overseas implications, but advice will be needed on both.

Why use a dual contract?

A person who is resident but not domiciled or deemed domiciled in the UK can use the remittance basis for earnings from an employment that is both:

  1. with a foreign employer, and

  2. for duties performed wholly outside the UK

ITEPA 2003, ss 22, 23

The foreign earnings are known as ‘chargeable overseas earnings’ and are only chargeable to UK income tax when they are remitted to the UK. See the Remittance basis ―

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