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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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Remittance Basis: Introduction to the Remittance Basis: Foreign Income and Gains: Employment income - relevant foreign earnings

The meaning of relevant foreign earnings depends on the individual’s residence and domicile status. So ‘relevant foreign earnings’ has two possible meanings (ITA07/s809Z7(3)).

  1. R/OR but Non-Dom: Chargeable overseas earnings - ITEPA03/s22

These are the relevant foreign earnings of individuals who are:

  • resident and ordinarily resident in the UK (R/OR) but
  • not domiciled in the UK

and that arise from an employment that is:

  • with a foreign employer, i.e. an employer who is not resident in the UK and
  • for duties performed wholly outside of the UK

Refer to Employment Income Manual EIM40102 for further details

  1. R/NOR: General earnings (non-UK earnings) - ITEPA03/s26

These are the relevant foreign earnings of individuals who are:

  • resident (R) but
  • not ordinarily resident (NOR) in the UK

Their domicile status is not relevant.

General earnings are non-UK earnings and so relevant foreign earnings for the purposes of the remittance basis rules if they are:

  • earnings for employment duties which are performed outside the UK,

and they are not

  • earnings for employment overseas by the Crown

Refer to Employment Income Manual EIM40304 for further details.

Employees who are resident but not ordinarily resident in the UK and who perform duties of an office or employment both inside and outside the UK can choose not to apply the mixed fund rules (refer to RDRM35000) in respect of transfers from an account if, broadly, that account only contains employment income from that employment, gains from employees share scheme related transactions and interest arising on that account in respect of these.

For the 2008-09 tax year only HMRC will continue to operate Statement of Practice SP5/84 on the same basis as in 2007-08. The statement of practice will continue to operate on a concessionary basis until the end of the tax year 2008-09. This temporary measure is intended help ensure a smooth transition to the new legislation for employers and employees who use the statement of practice.

For full details of the practice that applies from 6 April 2009 refer to the Statement of Practice SP1/09.

These statements of practice also contain details about the apportionment of earnings where the duties of an office or employment are performed both inside and outside the UK.