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HMRC internal manual

Employment Income Manual

Chargeable Overseas Earnings - sections 22 and 23 ITEPA 2003

Part 2 Chapter 5 ITEPA 2003

Section 22 and 23

Where a non-domiciled, remittance basis taxpayer does not or no longer falls within section 26A, earnings from the entire duties of an employment with a UK employer become chargeable under section 15 irrespective of where in the world those duties are performed. This is however not the case where earnings are received from an employment which is held with a foreign employer, where the duties of that employment are performed wholly abroad. In this case a non-domiciled taxpayer can elect to pay tax on the remittance basis on earnings from that employment.

Such earnings from a foreign employment are known as chargeable overseas earnings. Section 22 introduces the term “chargeable overseas earnings”. It states that the full amount of any chargeable overseas earnings which are remitted to the UK in a tax year is an amount of taxable earnings from the employment in that year. The definition of chargeable overseas earnings is contained in section 23. This requires that:

  • The remittance basis applies to the employee for that year
  • The employee does not meet the requirements of section 26A for that year (see EIM40102)
  • The employment is with a foreign employer, and
  • The duties of the employment are performed wholly outside the UK

The entire amount of any such earnings become chargeable overseas earnings but only the amount remitted becomes an amount of taxable earnings for the purposes of section 10(2).

Section 23 requires that the duties of the employment are performed wholly outside the UK. However the performance of some merely incidental duties of the employment within the UK will not alter the character of the earnings from being overseas chargeable earnings. Full details of this are at EIM40204.