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HMRC internal manual

Employment Income Manual

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The scope of the charge to tax on general earnings: Crown servants: general earnings from overseas Crown employment subject to United Kingdom tax

Part 2 Chapter 5 ITEPA 2003

Section 28 ITEPA 2003 defines a special class of earnings for the purposes of Sections 15 and 26 to 27 (before 6 April 2008 it applied for the purposes of Sections 25 to 27). “Crown employment” means:

  • employment under the Crown
  • which is of a public nature and
  • the earnings from which are payable out of the public revenue of the United Kingdom or of Northern Ireland.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

General earnings from overseas Crown employment are earnings from such employment in respect of duties performed outside the United Kingdom. Such earnings are taken to be subject to United Kingdom tax unless they are excepted by an order made under Section 28(5).

General earnings from overseas Crown employment subject to United Kingdom tax are chargeable under:

  • Section 15 (or Section 25 before 6 April 2008): employee resident but not ordinarily resident in the United Kingdom or
  • Section 27: employee not resident in the United Kingdom.

Such earnings are specifically excluded from the scope of Section 26: “foreign earnings for year when employee resident but not ordinarily resident in the United Kingdom”. The practical consequence of this is that the general earnings of Crown servants are subject to United Kingdom tax irrespective of residence status or the place where the duties of the employment are performed. Crown servants are not entitled to the Seafarers’ Earnings Deduction in Part 5 Chapter 6 (see EIM33035) and their general earnings are not chargeable overseas earnings for the purposes of Section 22 (see EIM40102). See EP8145 for guidance when the holder of such an employment begins to serve abroad.

Order under Section 28(5)

Section 28(5) to (7) derive from ESC A25, a concession that operated before 6 April 2003 to remove from the scope of UK income tax locally engaged, low paid staff employed overseas by the Crown, in accordance with long-standing practice and in keeping with international treaty obligations. The terms of the current order are reproduced at EIM40209.