EIM40302 - Meaning of "remitted to the United Kingdom"

Sections 33 and 34 ITEPA 2003

Section 33 provides that general earnings are treated as remitted to the United Kingdom at the time when they are:

• paid, used or enjoyed in the United Kingdom, or
• transmitted or brought to the United Kingdom in any manner or form.

Paid in the United Kingdom

Earnings are remitted to the United Kingdom if they are paid to the employee in cash in this country or if the employee's bank account here is credited with them. Employees may arrange to have earnings paid into offshore bank accounts to avoid this rule. Money that is transmitted from the employer's bank in the United Kingdom to the employee's offshore bank is not treated as remitted here. It has been in the banking system all of the time; the employee did not have access to it.

Used or enjoyed in, or transmitted or brought to the United Kingdom in any manner or form

IM1564 to IM1568 provide guidance on how income is remitted to the United Kingdom, how to measure the amount of the remitted income and how to identify the source of cash received here. The definition of remitted income for the purposes of employment income in Section 33 ensures that if general earnings are initially received abroad but are later brought to the United Kingdom in some way, they are regarded as remitted to the United Kingdom in the later year.

Loan arrangements

The definition in Section 33 is wide enough to cover most ways of bringing money into the country. For example, in Harmel v Wright (49TC149) an employee received earnings abroad and used them to buy shares in a company, which lent the money to a second company, which lent the money to the employee in London. It was held that the earnings had been remitted to the United Kingdom.

Assets

If an employee receives earnings abroad which are used to purchase assets such as a car or a painting and the employee then brings the assets into the United Kingdom the earnings used to purchase the assets are regarded as remitted to the United Kingdom.

Investments abroad

The treatment of investments made abroad depends on the particular facts. In general, money invested abroad by an employee resident here should not be regarded as remitted to the United Kingdom. However, if the investment is subsequently sold in this country, or sold abroad and the proceeds brought into the United Kingdom, the amount originally invested should then be regarded as remitted here.

Payment of a debt

If the employee is ordinarily resident, earnings that are applied to the payment of "UK-linked" debts may in certain circumstances be regarded as remitted to the United Kingdom. See EIM40303 for more information.

Benefits in kind

See EIM40303 for more information.