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HMRC internal manual

Employment Income Manual

Seafarers’ Earnings Deduction: when periods of non-residence begin and end

Extra Statutory Concession A11 (ESC A11)The residence status of an individual is decided for a complete tax year. There is no provision in the statutory rules for splitting a tax year into different residence categories. However, by concession, when an individual’s tax liability is affected by residence the tax year may be split. A charge will only arise in that part of the year when the employee is resident. See

EIM42850 for advice on ESC A11 and the full text of the concession.

Individual returning to the United KingdomIn most cases, following a period of non-residence, the individual will be regarded as becoming ordinarily resident from the date of return to the United Kingdom, applying the provisions of ESC A11. This treatment is beneficial to most employees and is applied automatically.

Exceptionally, an individual may not want the concession to apply because it does not benefit him or her. If so the statutory basis will be applicable and this means that the individual will be regarded as ordinarily resident in the United Kingdom for the whole tax year in which he or she returns, that is from 6 April in that year.

Individual leaving the United KingdomSimilarly, a person leaving the United Kingdom for permanent residence abroad would normally under the above concession be regarded as non-resident from the day after the date of departure. Exceptionally, it might be beneficial for that person to be regarded as resident in the United Kingdom for the whole of the year of departure.

Dealing with a request to disapply ESC A11If you receive a request to disapply ESC A11, point out to the individual that the statutory basis will have to apply for all income tax purposes. This will mean, for someone coming to the United Kingdom, that the earnings of the employment for the period from 6 April to the date of arrival will be chargeable under Section 15 (or21 before 6 April 2008) ITEPA 2003, in addition to those for the subsequent period.

Impact on chargeabilityIf the taxpayer’s request is confirmed, the period of residence, which may form part of an eligible period for the purposes of the Seafarers’ Earnings Deduction, may be regarded as commencing on 6 April prior to the date of arrival, following the taxation treatment.

Similarly, on departure from the United Kingdom, an employee may elect to be regarded as ordinarily resident for the whole of the tax year of departure, that is, until the following 5 April. This might, for example, establish an eligible period commencing before the previous 6 April or extend an existing eligible period.

ExampleSee example

EIM33064, which illustrates the application of ESC A11.