EIM43666 - Globally mobile employees: Overseas Workday Relief: pre-6 April 2025 tax years: Earnings which wholly relate to UK or non-UK duties
In some circumstances a particular amount of general earnings will be wholly attributable to duties performed either in or outside the UK, so that the character of those earnings will be determined by where those duties were performed.
In Perro v Mansworth (Inspector of Taxes) SpC286 a Special Commissioner found that the payment by an employer of an employee’s liability to tax on UK-based earnings was itself “an emolument in respect of duties performed in the UK”. Similarly, in Taylor v Provan (Inspector of Taxes) (49 TC 579) travel expenses paid to a director to come to the UK in order to perform duties here were considered to be “emoluments in respect of duties performed in the UK”.
Example
Ivor works both in and outside the UK during a tax year for which he has elected to be taxed on the remittance basis and meets the requirement of section 26A. While working outside the UK, Ivor unexpectedly has to visit a client away from his normal workplace, and personally pays for the travel costs, for which his employer subsequently reimburses him. The reimbursement is a payment of earnings, which is wholly attributable to the duties performed outside the UK, so that they would only be taxable when remitted to the UK.
While ordinarily Ivor would be entitled to a deduction for these expenses as they were incurred wholly and necessarily in the performance of his duties, this deduction is only available when the earnings in respect of the overseas duties to which the deduction relates become taxable, and so only when these amounts are remitted (see EIM31755).