HMRC internal manual

Employment Income Manual

EIM40601 - Double taxation

An employee who works outside the United Kingdom may face a tax bill in both states:

  • tax is due under the rules of the United Kingdom because the employee is resident here and
  • tax is due under the rules of the overseas country because employment duties are carried out in that state.

No one should pay tax in 2 states on the same income. To prevent a double charge, the United Kingdom has entered into double taxation agreements (DTA) with many other countries whereby, in particular circumstances, one country or the other will give up its claim to tax, or else agree to give credit for the tax paid to the other country.

Where there is no agreement, the United Kingdom will in certain cases give relief unilaterally.

When you’re working cases that involve the foreign aspects of employment income, bear the DTA in mind. It’s possible that a tax charge exists under domestic United Kingdom rules but we give up that right in favour of another state.

See the DT1920 for more information on double taxation arrangements in respect of employment income.

See EIM40602 for guidance on the procedure to follow.