Income Tax (Earnings and Pensions) Act 2003

• (b) for qualifying securities income to be “qualifying foreign securities income”.

Claim for relief

41P

• (1) Where an individual has made a foreign employment election, the individual may make a claim for relief for the qualifying year or any subsequent tax year (“a foreign employment relief claim”).

• (2) Where an individual makes a foreign employment relief claim for a tax year, the individual is entitled to relief that is equal to so much of the net taxable employment income for that year as—

• (a) reflects qualifying foreign employment income (see section 41Q), and

• (b) is identified as such in the claim.

• (3) But subsection (2) only applies to the extent the total amount of the relief given does not exceed the limit (see section 41R).

• (4) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year for which the claim is made (see Step 2 of the calculation in section 23 of ITA 2007).

• (5) A foreign employment relief claim must be made in a return.

• (6) A foreign employment relief claim for a tax year must be made before the end of the period of 12 months beginning with 31 January after the end of that tax year.

• (7) A foreign employment relief claim may not be made as a consequential claim (within the meaning of section 43C(5) of TMA 1970) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf.

• (8) For the purposes of this Chapter “net taxable employment income”, in relation to a tax year, means the employment income on which the individual is charged to tax for the tax year (see section 9(1)).

41Q

• (1) For the purposes of section 41P(2), the amount of net taxable employment income for a tax year that “reflects” qualifying foreign employment income is the total of—

• (a) the total of the amount of the net taxable earnings from each employment in the tax year that reflects qualifying foreign general earnings (see subsections (2) to (5)), and

• (b) the total of the amount of the net taxable specific income from each employment for the tax year that reflects qualifying foreign third party income or qualifying foreign securities income (see subsection (6)).

• (2) The amount of the net taxable earnings from an employment in a tax year that “reflects” qualifying foreign general earnings is—

• (a) the amount of the taxable earnings from the employment in the tax year that are qualifying foreign general earnings, minus

• (b) the amount of the qualifying deductions.

• (3) If the amount calculated under subsection (2) is nil or a negative amount, then none of the net taxable earnings from the employment in the tax year reflect qualifying foreign general earnings.

• (4) If the foreign employment relief claim is for the qualifying year, the amount of the qualifying deductions is the proportion of the total deductions that is the same as the proportion of the claim year taxable earnings that are qualifying foreign general earnings.

• (5) If the foreign employment relief claim is for a subsequent tax year, the amount of the qualifying deductions is the amount resulting from the following steps—

• Step 1Deduct the claim year taxable earnings from the total deductions.If the result is nil or a negative amount, there are no qualifying deductions.

• Step 2Deduct any other taxable earnings that are not qualifying foreign general earnings.If the result is nil or a negative amount, there are no qualifying deductions.

• (6) The proportion of the net taxable specific income from an employment for a tax year that “reflects” qualifying foreign third party income or qualifying foreign securities income is the same as the proportion of the taxable specific income for the employment in that year that is qualifying foreign third party income or qualifying foreign securities income.

• (7) In this section—

• “claim year taxable earnings” means the taxable earnings from the employment in the tax year that are “for” the year for which the claim is made determined in accordance with section 16 and 17;

• “total deductions” means the total amount of any deductions allowed from the taxable earnings from the employment in the tax year under provisions listed in section 327(3) to (5) (see section 11(1)).

41R

• (1) This section sets out how to determine the limit on the amount of relief the individual is entitled to when making a foreign employment relief claim for a year for the purposes of section 41P(3).

• (2) The limit is the lesser of—

• (a) 30% of the relevant qualifying employment income, and

• (b) £300,000.

• (3) For the purposes of this section “relevant qualifying employment income” means—

• (a) so much of the net taxable employment income for the tax year for which the claim is made as reflects qualifying employment income, and

• (b) if the foreign employment relief claim is for a tax year that is subsequent to the qualifying year, so much of any net taxable employment income for any earlier tax year (but not any tax year before the qualifying year) as would reflect qualifying employment income if that earlier year was the year for which the claim was made.

• (4) If the foreign employment relief claim is for a tax year that is subsequent to the qualifying year, the limit is reduced by the total of any amounts reflecting qualifying foreign employment income that have previously been relieved under section 41P.

• (5) To determine the amounts mentioned in subsection (3)(a) and (b), apply section 41Q, but as if—

• (a) the references in that section to qualifying foreign employment income were to qualifying employment income,

• (b) the references in that section to qualifying foreign general earnings were to qualifying general earnings, and

• (c) the references in that section to qualifying foreign third party income and qualifying foreign securities income were references to qualifying third party income and qualifying securities income.

41S

• (1) This section applies where an individual who is an active member of a registered pension scheme for the purposes of section 188 of FA 2004 (relief for contributions) makes a foreign employment relief claim for a tax year.

• (2) For the purposes of sections 189(1)(a) and 190 of that Act, references to the amount of the individual’s relevant UK earnings chargeable to income tax for that year are to be read as references to that amount minus the relieved amount.

• (3) The “relieved amount” is the amount of the relief to which the individual is entitled under section 41P(2) of this Act as a result of making the foreign employment relief claim.

41T

• (1) Subsection (2) applies for the purpose of determining the adjusted net income under section 58 of ITA 2007 of an individual for a tax year for which the individual is entitled to relief under section 41P.

• (2) The adjusted net income is to be determined as if the relief had not been deducted in calculating the individual’s net income for the tax year.

Qualifying foreign employment income

41U

• (1) General earnings are “qualifying general earnings” if they are—

• (a) “for” the qualifying year determined in accordance with sections 16 and 17,

• (b) if the qualifying year is a split year as respects the individual, attributable to the UK part of the year, and

• (c) from an employment the duties of which are performed wholly or partly outside the UK during the qualifying year.

• (2) Any attribution required for the purposes of subsection (1)(b) is to be done on a just and reasonable basis.

• (3) Qualifying general earnings are “qualifying foreign general earnings” if they are neither—

• (a) in respect of duties performed in the United Kingdom, nor

• (b) from overseas Crown employment subject to United Kingdom tax (see section 41W).

• (4) For the purposes of subsection (3), the extent to which qualifying general earnings are in respect of duties performed in the United Kingdom is to be determined on a just and reasonable basis.

41V

• (1) For the purposes of this Chapter, “third party income” is an amount that counts under Chapter 2 of Part 7A (treatment of relevant step for income tax purposes) as employment income in respect of an employment.

• (2) Third party income is “qualifying third party income”—

• (a) if it is in respect of an employment the duties of which are performed wholly or partly outside the UK during the qualifying year, and

• (b) to the extent that the value of the relevant step that counts as employment income (see section 554Z3) is—

• (i) “for” the qualifying year determined in accordance with section 554Z4(2), and

• (ii) if the qualifying year is a split year as respects the individual, attributable to the UK part of the year.

• (3) Any attribution required for the purposes of subsection (2)(b)(ii) is to be done on a just and reasonable basis.

• (4) Qualifying third party income is “qualifying foreign third party income” to the extent that it is not in respect of duties performed in the United Kingdom.

• (5) The extent to which qualifying third party income is not in respect of duties performed in the United Kingdom is to be determined on a just and reasonable basis.

41W

• (1) For the purpose of this Chapter, “securities income” is an amount that counts under Chapters 2 to 5 of Part 7 (employment-related securities etc) as employment income in respect of an employment (the “relevant employment”).

• (2) Securities income is “qualifying securities income”—

• (a) if the duties of the relevant employment are performed wholly or partly outside the UK during the qualifying year, and

• (b) to the extent that it—

• (i) accrues during the qualifying year, or

• (ii) if the qualifying year is a split year as respects the individual, accrues during the UK part of the year.

• (3) To determine when securities income accrues treat an equal amount of the securities income as accruing on each day of the relevant period determined in accordance with section 41G.

• (4) But if the proportion of the securities income that would be regarded as qualifying securities income by virtue of subsection (3) is not, having regard to all the circumstances, just and reasonable, the amount of the securities income that is qualifying securities income is such amount as is just and reasonable.

• (5) Qualifying securities income is wholly “qualifying foreign securities income” if the duties of the relevant employment are performed wholly outside the United Kingdom.

• (6) If some, but not all, of the duties of the relevant employment are performed outside the United Kingdom—

• (a) the qualifying securities income is to be apportioned (on a just and reasonable basis) between duties performed in the United Kingdom and duties performed outside the United Kingdom, and

• (b) the income apportioned in respect of duties performed outside the United Kingdom is qualifying foreign securities income.

• (7) But qualifying securities income from overseas Crown employment subject to United Kingdom tax is not qualifying foreign securities income.

41X

• (1) This section explains what is meant by —

• (a) qualifying general earnings “from overseas Crown employment subject to United Kingdom tax” for the purposes of section 41T(3)(b), and

• (b) qualifying securities income “from overseas Crown employment subject to United Kingdom tax” for the purposes of section 41V(7).

• (2) Qualifying general earnings and qualifying securities income are “from overseas Crown employment” if the earnings or income is from Crown employment (within the meaning of section 28(2)) in respect of duties performed outside the United Kingdom.

• (3) Such earnings or income are to be taken as being “subject to United Kingdom tax” unless they fall within any exception contained in an order made under section 28(5) for the purposes of section 27(2).

• (4) An order made under section 28(5) may also—

• (a) provide for any exceptions mentioned in subsection (3) to not apply for the purposes of this section, and

• (b) make exceptions for the purposes of this section.

• (5) For the purposes of this section, if securities income is partly from overseas Crown employment subject to United Kingdom tax, a just and reasonable proportion of the securities income is to be taken to be from such employment.

41Y

• (1) Section 38 (period of absence from employment) applies for the purposes of this Chapter as if references to general earnings were to general earnings or third party income.

• (2) Section 40(1) and (2) (place of performance of duties on board vessel or aircraft) applies for the purposes of this Chapter.

• (3) Duties of an employment performed in the UK sector of the continental shelf in connection with exploration of exploitation activities are to be treated for the purposes of this Chapter as being performed in the United Kingdom.

• (4) In subsection (3) “the UK sector of the continental shelf” and “exploration or exploitation activities” have the same meaning as in section 41 (treatment of general earnings from employment in the UK sector of the continental shelf).

Other rules for determining amounts of qualifying foreign employment income

41Z

• (1) Any arrangements falling within subsection (2) are to be disregarded for the purposes of determining the extent to which—

• (a) general earnings are qualifying general earnings;

• (b) third party income is qualifying third party income;

• (c) securities income is qualifying securities income;

• (2) Arrangements fall within this subsection if the main purpose, or one of the main purposes of the arrangements is to enable an individual to obtain—

• (a) relief under this Chapter to which they would not otherwise be entitled, or

• (b) relief under this Chapter of a greater amount than that to which they would otherwise be entitled.

• (3) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

41Z1

• (1) This section applies if—

• (a) the individual has associated employments from or in respect of which there is qualifying employment income, and

• (b) the duties of the associated employments are not performed wholly outside the United Kingdom.

• (2) There is a limit on how much of the qualifying employment income from or in respect of the associated employments is qualifying foreign employment income.

• (3) The limit is the proportion of the qualifying employment income that is reasonable having regard to—

• (a) the nature of, and time devoted to, the duties performed outside the United Kingdom, and those performed in the United Kingdom, and

• (b) all other relevant circumstances.

• (4) In this section “associated employments” means employments with the same employer or with associated employers; and section 24(5) and (6) applies for the purposes of this section.

Meaning of “relevant transaction”

690A

• (1) This section applies in relation to an employee if the employee is or has been internationally mobile within the meaning of section 690(2) at any time in tax year 2025-26 or a subsequent tax year (“the mobile tax year”).

• (2) The appropriate person may give a notice to an officer of Revenue and Customs at any time during the mobile tax year—

• (a) that the employer is proposing to treat a proportion of any uncertain payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and

• (b) specifying that proportion.

• (3) If a notice given under this section has effect, the proportion of any uncertain payment made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice.

• (4) But if section 690D(4) (employer notification for qualifying new resident) also applies to a payment made by the employer, subsection (3) does not apply to the payment to the extent that it is a qualifying payment within the meaning of section 690D.

• (5) A notice given under this section—

• (a) does not have effect if a direction has previously been given to the appropriate person under section 690B (direction by HMRC in relation to internationally mobile employees) in relation to the employee and the mobile tax year;

• (b) otherwise, has effect when it is acknowledged by an officer of Revenue and Customs.

• (6) A notice given under this section ceases to have effect if—

• (a) a direction under section 690B is given to the appropriate person in relation to the employee and the mobile tax year,

• (b) a subsequent notice is given by the appropriate person under this section and is acknowledged by an officer of Revenue and Customs, or

• (c) where the notice was given on the basis that the employee was likely to be a non-UK resident for the mobile tax year, a subsequent notice—

• (i) is given by the appropriate person under section 690D (employer notification for qualifying new resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year, and

• (ii) is acknowledged by an officer of Revenue and Customs.

• (7) A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs.

• (8) Subsection (3) is without prejudice to—

• (a) any assessment in respect of the income of the employee in question, and

• (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

• (9) For the purposes of this section and sections 690B, 690D and 690E —

• (a) where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 693 (cash vouchers), section 694 (non-cash vouchers) or section 695 (credit-tokens), the employer is to be treated as making a payment of that amount of employment income, and

• (b) “the appropriate person” means—

• (i) the person designated by the employer for the purpose of this section and sections 690B, 690D and 690E and, if no person is so designated, the employer, and

• (ii) in a case where section 689 or 689A applies, the references to the employer in sub-paragraph (i) are to be read as references to the relevant person (within the meaning of section 689 or 689A).

690B

• (1) This section applies where—

• (a) a notice given during the mobile tax year under section 690A has effect, and

• (b) it appears to an officer of Revenue and Customs that the proportion of any uncertain payment made by the employer to the employee that is treated as not being a payment of PAYE income for the purposes of PAYE regulations should not be the proportion specified in the notice.

• (2) An officer of Revenue and Customs may give a direction—

• (a) for determining a proportion of any uncertain payment made by the employer to the employee which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income, or

• (b) that any such payment is to be treated entirely as PAYE income for the purposes of PAYE regulations.

• (3) A direction under subsection (2)—

• (a) must specify the employee and the mobile tax year,

• (b) must be given by notice to the appropriate person, and

• (c) may be varied by notice to the appropriate person from a date specified in the notice (which may not be earlier than 30 days from the date on which the notice is given).

• (4) If—

• (a) a direction under subsection (2) has effect, and

• (b) any uncertain payment is made by the employer to the employee in any tax year,

the direction applies in relation to the payment.

• (5) A direction under subsection (2) has effect when it is given.

• (6) A direction under subsection (2) ceases to have effect if—

• (a) the notice to which the direction relates was given on the basis that the employee was likely to be non-UK resident for the mobile tax year, and

• (b) a notice has subsequently been—

• (i) given by the appropriate person under section 690D (employer notification for qualifying new resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year, and

• (ii) acknowledged by an officer of Revenue and Customs.

• (7) Subsection (4) is without prejudice to—

• (a) any assessment in respect of the income of the employee in question, and

• (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

690C

• (1) This section applies in relation to an employee if the employee falls within subsection (2) or (3) in relation to a tax year that was before tax year 2025-26.

• (2) An employee falls within this subsection in relation to a tax year if the employee worked both inside and outside the UK in that tax year and—

• (a) the employee was non-UK resident for that tax year or it appears likely to the employer that the employee was non-UK resident, or

• (b) the tax year was a spilt year as respects the employee or it appears likely to the employer that the tax year was such a year.

• (3) An employee falls within this subsection in relation to a tax year if—

• (a) the employee worked outside the UK in the tax year,

• (b) the employee met the requirement of section 26A for that tax year or it appears likely to the employer that the employee met that requirement, and

• (c) the employee has made a claim under section 809B of ITA 2007 (claim for remittance basis) for that tax year or it appears likely to the employer that the employee has or will make such a claim.

• (4) If the employer makes a payment to the employee of, or on account of, general earnings for that tax year, the amount of the payment that is to be treated as PAYE income for the purposes of the PAYE regulations is the amount that, on the basis of the best estimate that can be reasonably made, is likely to be PAYE income.

• (5) For the purposes of subsection (4)—

• (a) where this section applies to an employee because it appears likely to the employer that a certain state of affairs exists, the employer may assume that state of affairs exists;

• (b) whether general earnings are “for” that tax year is determined in accordance with sections 29 and 30.

690D

• (1) This section applies in relation to an employee if—

• (a) the employee is or is likely to be a qualifying new resident for a tax year (“the qualifying year”), and

• (b) the employee works or is likely to work outside the UK during the qualifying year.

• (2) The appropriate person may give a notice to an officer of Revenue and Customs at any time during the qualifying year—

• (a) that the employer is proposing to treat the foreign proportion of any qualifying payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and

• (b) specifying that proportion.

• (3) For the purposes of this section and section 690E—

• (a) a “qualifying payment” means a payment of, or on account of, an amount of employment income of the employee that is likely to be qualifying employment income;

• (b) the “foreign proportion” of a qualifying payment is the proportion of the employment income that, on the basis of the best estimate that can reasonably be made, is likely to be qualifying foreign employment income.

• (4) If a notice given under this section has effect, the proportion of any qualifying payment made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice.

• (5) A notice given under this section—

• (a) does not have effect if a direction has previously been given to the appropriate person under section 690E (direction by HMRC in relation to qualifying new residents) in relation to the employee and the qualifying year;

• (b) otherwise, has effect when it is acknowledged by an officer of Revenue and Customs.

• (6) A notice given under this section ceases to have effect if—

• (a) a direction under section 690E is given to the appropriate person in relation to the employee and the qualifying year,

• (b) a subsequent notice is given by the appropriate person under this section and is acknowledged by an officer of Revenue and Customs, or

• (c) a subsequent notice—

• (i) is given by the appropriate person under section 690A (employer notification for internationally mobile employee) on the basis that the employee is or is likely to be non-UK resident in the qualifying year, and

• (ii) is acknowledged by an officer of Revenue and Customs.

• (7) A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs.

• (8) Subsection (4) is without prejudice to—

• (a) any assessment in respect of the income of the employee in question, and

• (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

• (9) For the purposes of this section and section 690E—

• (a) where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 687A or 695A (employment income under Part 7A) or section 696 (readily convertible assets), the employer is to be treated as making payment of that amount of employment income, and

• (b) “qualifying new resident”, “qualifying employment income” and “qualifying foreign employment income” have the same meaning as in Chapter 5C of Part 2 (relief for new residents on foreign employment income).

690E

• (1) This section applies where—

• (a) a notice given during the qualifying year under section 690D has effect, and

• (b) it appears to an officer of Revenue and Customs that the proportion of any qualifying payment made by the employer to the employee that is treated as not being a payment of PAYE income for the purposes of PAYE regulations should not be the proportion specified in the notice.

• (2) An officer of Revenue and Customs may give a direction—

• (a) for determining a proportion of any qualifying payment made by the employer to the employee which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income, or

• (b) that any such payment is to be treated entirely as PAYE income for the purposes of PAYE regulations.

• (3) A direction under subsection (2)—

• (a) must specify the employee and the qualifying year,

• (b) must be given by notice to the appropriate person, and

• (c) may be varied by notice to the appropriate person from a day specified in the notice (which may not be earlier than 30 days from the date on which the notice is given).

• (4) If—

• (a) a direction under subsection (2) has effect, and

• (b) any qualifying payment is made by the employer to the employee in any tax year,

the direction applies to the payment.

• (5) A direction under subsection (2) has effect when it is given.

• (6) A direction under subsection (2) ceases to have effect if a notice has subsequently been—

• (a) given by the appropriate person under section 690A (employer notification for internationally mobile employee) on the basis that the employee is or is likely to be non-UK resident for the qualifying year, and

• (b) acknowledged by an officer of Revenue and Customs.

• (7) Subsection (4) is without prejudice to—

• (a) any assessment in respect of the income of the employee in question, and

• (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

707A

• (1) PAYE regulations may include provision requiring an employer to provide any information that is specified or described in regulations made by the Commissioners (whether or not that information is also relevant to the assessment, charge, collection and recovery of income tax in respect of PAYE income).

• (2) The Commissioners for His Majesty’s Revenue and Customs may only specify or describe information in regulations under subsection (1) if the Commissioners consider that the information is relevant for the purpose of the collection and management of any of the taxes listed in section 1 of TMA 1970.