An employee who is resident in the UK but domiciled in France has an employment with a Belgian employer the duties of which are performed wholly in Belgium. In 2003/04 the general earnings from the employment total £30,000, of which £25,000 is received in the UK. The employee is entitled to
The chargeable overseas earnings are calculated by subtracting from the full amount of earnings any amounts that would (assuming the earnings were taxable) be allowed as deductions from those earnings (Step 2 Section 23 ITEPA 2003), see EIM40102. The calculation is as follows:
| Total earnings | £30,000 | ||
| Deductions from earnings, see EIM31770 | £500 + £2,800 | = | £3,300 |
| Chargeable overseas earnings | £26,700 |
The amount potentially chargeable on remittance to the UK is
£26,700 but the charge is restricted to the amount received in
the UK, £25,000, see
EIM40301.
The earnings that are not chargeable overseas earnings within
Section 22 because of the operation of Step 2 in Section 23 will be
taxable under Section 21.:
| Earnings chargeable under Section 21 | £30,000 - £26,700 | = | £3,300 |
| Deducted from earnings | £3,300 | ||
| Net taxable earnings charged on receipt under Section 21 | Nil |
