EIM40002 - General earnings from employment: "taxable earnings"

Part 2 Chapters 4 and 5 ITEPA 2003

Chapters 4 and 5 of Part 2 include the charging provisions for general earnings. General earnings from an office or employment that are not covered by any of these charging provisions are not taxable earnings and therefore fall outside of the scope of United Kingdom income tax.

The circumstances of the employee or office holder (see EIM40001) are used to determine the relevant charging provision. The charging provisions are summarised below together with the relevant guidance:

Chapter 4 ITEPA 2003: employee resident, ordinarily resident and domiciled in the UK

Section 15
General earnings for a tax year in which the employee or office holder is resident, ordinarily resident and domiciled in the United Kingdom (see EIM40101).

Chapter 5 ITEPA 2003: employee resident, ordinarily resident or domiciled outside the UK

Section 21
General earnings for a tax year in which the employee or office holder is resident and ordinarily resident but not domiciled in the United Kingdom, except chargeable overseas earnings (see EIM40101).
Section 22
General earnings for a tax year in which the employee or office holder is resident and ordinarily resident but not domiciled in the United Kingdom, to the extent that they are chargeable overseas earnings (see EIM40102).
Section 25
UK-based earnings for a tax year when employee or office holder is resident but not ordinarily resident in the UK (see EIM40201 and EIM40221).
Section 26
Foreign earnings for a tax year when employee or office holder is resident but not ordinarily resident in the UK (see EIM40301).
Section 27
UK-based earnings for a tax year when employee or office holder is not resident in the UK (see EIM40201 and EIM40221).

The year that general earnings are “for”

The rules for determining whether general earnings are earnings for a particular tax year are the same for all of the charging provisions. Broadly, Section 16 (Chapter 4) and Section 29 (Chapter 5) provide that the year that general earnings are “for” will be the year in which they are earned or are otherwise in respect of. The circumstances listed above must be considered in the year that general earnings are “for” to decide whether they can be taxable earnings.

Special rules in Section 17 (Chapter 4) and Section 30 (Chapter 5) provide for general earnings to fall within the appropriate charging provision even if the employment had not started when they were received or had ended before they were received (see EIM40005).

Taxable earnings

Once the appropriate charging provision has been identified, the amount of general earnings that are taxable earnings will be as follows:

For most employees the tax year that general earnings are “for” and the tax year in which they are received will be the same. However, when those years are different, general earnings within one of the charging provisions for the tax year they are earned will be taxable earnings in the tax year that they are received (Sections 15, 21, 25 and 27) or remitted to the United Kingdom (Sections 22 and 26).

Further guidance: