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HMRC internal manual

Employment Income Manual

General earnings: examples of the charging provisions

Part 2 Chapters 4 and 5 ITEPA 2003

1. Resident

The European Sales Manager of a multi-national company is based in London. She frequently travels to Milan, Bonn and Paris to meet clients. Trips normally last for one week. Over a tax year she spends a total of about 3 months outside of the United Kingdom.
 
All of the emoluments from this employment are chargeable under section 15, as the employee is resident in the United Kingdom.

2. Resident but not domiciled - long term UK resident

A semi-retired employee of a US resident company lives in London. Although he has lived in the United Kingdom for over 20 years he has retained his US domicile. He has one employment contract for duties performed in the UK but also maintains a small portfolio of Swiss clients under a separate employment contract. He travels to Zurich to see them. All of the duties of the latter employment are performed outside the United Kingdom.
 
The earnings for duties performed in the UK will be chargeable in the UK because the employee is UK resident. Section 15 will apply to those earnings for any years when the employee is UK resident.

The position is different for earnings from the non-UK employment. The employee has not had 3 years of recent non-residence so the conditions of section 26A are not met (see EIM40102). The employee is chargeable under section 22 on chargeable overseas earnings that are remitted to the United Kingdom. The general earnings are overseas earnings due to the residence and domicile status of the employee, the employment with a foreign employer and the performance of the duties of the employment wholly outside the United Kingdom. After calculating the amount of chargeable overseas earnings, those earnings can only be charged under section 22 to the extent that they are remitted to the United Kingdom.

3. Not Resident

A non-resident director spends 2 days each month in the United Kingdom at the premises of a small family company. She spends the time reviewing management accounts, discussing progress with team leaders and attending board meetings. The company pays her salary into a Spanish bank account, the country in which the director resides.
 
The director is chargeable under section 27 on general earnings from duties performed in the United Kingdom. General earnings from any duties performed in Spain for the UK company are not liable to United Kingdom Income Tax, as they do not fall under any of the charging provisions.

Double taxation treaties

When looking at the liability of foreign nationals working in the United Kingdom or United Kingdom residents working abroad it is important to consider the relevant double taxation treaties to determine whether the earnings are chargeable in 2 states and which state has primary taxing rights. See [E](https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim40601)IM40601 and subsequent.