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HMRC internal manual

Employment Income Manual

The general rule for employees: expenses: expenses that are deductible where some or all of the duties are performed outside the UK: deductions from earnings charged on remittance: chargeable overseas earnings

Sections 22 to 24 ITEPA 2003

Section 22 charges the full amount of ‘chargeable overseas earnings’ remitted to the United Kingdom in the tax year. The section applies to general earnings for a tax year in which:

  • the employee is resident and ordinarily resident but not domiciled in the United Kingdom
  • the employment is with a “foreign employer” (see EIM40031)
  • the duties of the employment are performed wholly outside the United Kingdom

See EIM40102 for further guidance.

The amount of chargeable overseas earnings is determined in accordance with the 3 steps in section 23. Step 2 provides that the amount of chargeable overseas earnings is taken to be the amount remaining after any capital allowances and after any deductions under sections 232 and 327 to 385 ITEPA 2003, or under sections 592 or 594 ICTA 1988.

Example EIM31771 shows how to calculate chargeable overseas earnings where step 2 applies.