Employment Tax

Remittance basis ― overview with employment focus

Produced by Tolley in association with Sarah Robert of James Cowper Kreston
  • 18 May 2022 14:31

The following Employment Tax guidance note Produced by Tolley in association with Sarah Robert of James Cowper Kreston provides comprehensive and up to date tax information covering:

  • Remittance basis ― overview with employment focus
  • General earnings in respect of duties performed in the UK
  • Overseas workday relief (OWR)
  • Dual contracts
  • Matching earnings with workdays
  • What is a workday?
  • How to apportion earnings
  • Cash-flow issues
  • Overseas bank account
  • Payment of UK tax

Remittance basis ― overview with employment focus

General earnings in respect of duties performed in the UK

Employees who are resident but not domiciled in the UK for tax purposes are chargeable to income tax on general earnings for duties performed in the UK. Where all employment duties are UK duties, then all earnings are taxable in the UK. See ITEPA 2003, s 15.

Overseas workday relief (OWR)

Where duties are performed partly in the UK and partly overseas, a calculation is needed to determine how much of the earnings represent UK duties and how much represent overseas duties. The overseas duties may then be subject to OWR.

Employees who are non-domiciled but resident in the UK on a short-term basis may benefit from relief from UK tax on overseas (or foreign) earnings under the OWR provisions.

The following conditions must be met:

  1. the employee is not domiciled in the UK throughout the year

  2. the employee elects to be taxed on the remittance basis

  3. the employment duties are carried on wholly or partly outside the UK

The relief is available for the year of establishing UK residence and the following two years. If an employee arrives at the end of a tax year they will receive a shorter period of OWR compared to an employee arriving at the beginning of a tax year. Planning can therefore be taken to maximise the relief by arriving at the beginning of a tax year.

The number of tax years for which an individual can be eligible

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Use of capital losses

If an individual sells a chargeable asset and makes an allowable loss, how can this be relieved?First of all, since the simplification of capital gains tax from 6 April 2008, the proforma to calculate a loss is the same as the proforma to calculate a gain. See the Basic calculation principles of

26 Apr 2022 10:42 | Produced by Tolley Read more Read more

Taxation of loan relationships

The vast majority of companies will have loan relationships and so will need to consider how they are taxed under the loan relationship rules. There are also specific provisions dealing with relevant non-lending relationships and other deemed loan relationships. Companies are generally taxable on

05 Apr 2022 08:44 | Produced by Tolley Read more Read more

VAT fuel scale charges

VAT fuel scale chargesWhat are fuel scale charges?The VAT fuel scale charge is a simplified method that can be used by a business that funds both business and private mileage costs for employees to account for any output tax due on the private use of the vehicle. The charge was introduced to

06 Apr 2022 18:13 | Produced by Tolley Read more Read more