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HMRC internal manual

Employment Income Manual

Employment income provided through third parties: remittance basis: A does not meet Section 26A requirement or is ordinarily UK resident

Sections 554Z9 and 554Z17(3) ITEPA 2003

Section 554Z9 links the Part 7A rules in with the remittance basis in cases in which A is non-UK domiciled but either does not meet the requirement of Section 26A ITEPA 2003 or is ordinarily UK resident. It is similar to Section 22 ITEPA 2003 (general earnings: remittance basis applies and employee does not meet Section 26A requirement or is ordinarily UK resident). See EIM40301.


Section 554Z9 does not apply to employment income arising under the Part 7A rules if Section 24A ITEPA 2003 (restrictions on remittance basis) applies in relation to A’s employment with B for the relevant tax year.

Section 554Z9 does not apply to steps within Section 554Z18 or 554Z19.

On Sections 554Z18 and 554Z19 (undertakings given by employers etc in relation to retirement benefits etc: earmarking etc and provision of security), see EIM45150 and EIM45155 respectively.


Five conditions need to be met. These conditions are bulleted below.

  • The value of the relevant step, or a part of it, is ‘for’ a tax year (‘the relevant tax year’) as determined under Section 554Z4 (residence issues), see EIM45720.
  • Section 809B, 809D or 809E ITA 2007 (remittance basis) applies to A for that tax year, see RDRM30000 onwards.
  • A does not meet the requirements of Section 26A ITEPA 2003 (for tax years before 2013-14, A is ordinarily UK resident) in that tax year.
  • A’s employment with B in that tax year is employment with a foreign employer.
  • The duties of that employment in that tax year are performed wholly outside the United Kingdom.

‘Taxable specific income’

If these five conditions are met, A’s employment income under the Part 7A rules (see EIM45705), or the relevant part of it, is ‘taxable specific income’ in a tax year so far as it is remitted to the United Kingdom in that year.

‘Remitted to the United Kingdom’ has a wide meaning. Money and property can be ‘remitted’ to the United Kingdom without being physically brought into this country. See RDRM33020.

Such ‘taxable specific income’ is included in A’s ‘foreign specific employment income’ for the relevant tax year under Section 809Z7(4A) and (4B) ITA 2007. On ‘foreign specific employment income’, see RDRM31120.

If any income is remitted before A’s employment with B starts, you treat it as being remitted in the tax year in which the employment starts.

Associated employments

A’s taxable specific income is limited if, in the relevant tax year:

  • A has associated employments, and
  • the duties of the associated employments are not performed wholly outside the United Kingdom.

‘Associated employments’ are employments with B or with employers ‘associated’ with B within Section 24(5) and (6) ITEPA 2003. See EIM40103.

A’s taxable specific income is limited to such amount as is just and reasonable, having regard to all relevant circumstances. For example, you should have regard to the following factors.

  • A’s employment income for the relevant tax year from all associated employments, together with A’s employment with B.
  • The proportion of that income (or so much of it as is attributable to the UK part of the relevant tax year, if it was a split year as respects A) which is:

    • both general earnings and chargeable overseas earnings (see EIM31770), or
    • employment income which is taxable specific income (within Section 41A ITEPA 2003) from employment-related securities.
  • The nature of and time devoted in the tax year (or the UK part of it) to:

    • Duties performed outside the United Kingdom, and
    • Duties performed in the United Kingdom.