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HMRC internal manual

Employment Income Manual

Termination payments and benefits: example: foreign service reduction

Section 414 ITEPA 2003

For two out of five years’ total service, an employee is not resident and ordinarily resident in the UK and so the full exception in EIM13690 is not available.

The foreign service reduction of EIM13700 is calculated as follows:

Payments and benefits within Section 401 ITEPA 2003 £100,000
Less threshold (see EIM13700 and example EIM13980). £30,000
Amount charged to tax (see EIM13700) £70,000
Foreign service reduction = £70,000 x 2/5 £28,000
Section 401 ITEPA 2003 charge £42,000