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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Taxable earnings: employee resident in the United Kingdom and split year treatment

Part 2 Chapter 4 ITEPA 2003

Section 15

Section 15 applies to:

  • the general earnings, other than foreign and chargeable overseas earnings, for any tax year in which
  • the person holding the office or employment is resident in the United Kingdom
  • whether they are domiciled in the United Kingdom or elsewhere.

There is no reference to where the duties of the employment are performed. The majority of employees in the United Kingdom are chargeable under section 15. The provisions of section 26 apply to foreign earnings and section 22 to chargeable overseas earnings for any UK resident who is non-domiciled and has chosen to pay tax on their non-UK earnings under the remittance basis. These are detailed later in this section.
The full amount of section 15 earnings received in the tax year comprise taxable earnings whether the earnings are for that year or some other year and whether or not the employment is still held at the time when the earnings are received.

Split Year Treatment - Para 43 Sch 45 FA 2013

An employee may arrive in or depart from the UK part way through a tax year. If the individual becomes resident during the year of arrival or leaves the UK having established residence, the year may be treated as a split year for tax purposes. The year may be split into a UK part, when an employee will be charged to tax as resident in the UK, and an overseas part which will be a period when an employee will be taxed as though he or she is not UK resident. If split year treatment is applicable, any earnings for the overseas period will be excluded from the employee’s UK taxable earnings for that year. Full details on split year treatment can be found in leaflet RDR4