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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
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Application of the tax rules: residence of worker

Paragraph 11(3) Schedule 12 Finance Act 2000/Section 56(4) and (5) ITEPA 2003

Regulation 6(3) SI 2000 No. 727

Where the legislation applies, the worker is treated as receiving from the intermediary a payment that is chargeable to tax as employment income and subject to Class 1 NICs. For tax purposes, the treatment of this payment will therefore depend, not on the residence status of the client or of the intermediary, but on the residence status of the worker and the location in which the duties of the contract are carried out.

If the worker is resident and ordinarily resident in the UK for tax purposes, then the deemed payment will be taxable in the UK, regardless of where the duties are carried out. If the worker is resident but not ordinarily resident then he or she is taxable in the UK on all deemed payments arising from duties performed in the UK and on remittances to the UK of payments arising in respect of overseas duties.

For further information about the residence rules see EIM42802 and The Residence Guide.