A US employer assigns a US citizen to the United Kingdom for a
period of 2 to 3 years. Residence status is self-determined as
resident but not ordinarily resident in years 1 and 2.
The employee is Head of European Operations, a post that
requires a proportion of the duties to be performed outside the
United Kingdom. In consequence general earnings are likely to be
split between Section 15 (UK-based earnings)(or Section 25 before 6
April 2008) and Section 26 (foreign earnings). The earnings for
duties performed outside the United Kingdom are charged under
Section 26 if they are remitted to the United Kingdom as defined in
Section 809L ITA2007 (see
EIM40302).
Remuneration for year 1 is reported as below. In the year,
80/240 workdays were spent in the United Kingdom.
| Salary | £100,000 |
| Bonus | £100,000 |
| Car provided by the employer | £5,000 |
| House provided by the employer | £10,000 |
| School fees paid in the US | £10,000 |
| Total | £225,000 |
|
|
|
| Section 15 = £225,000 x 80/240 | £75,000 |
| Section 26 = 225,000 – 75,000 | £150,000* |
* chargeable if remitted to the United Kingdom.Note
: if in year 1 the employee was not resident in the United
Kingdom, £75,000 would be chargeable under Section 27 and the
balance (general earnings of £150,000) would not be chargeable
to United Kingdom income tax.
Appendix 2 at
EIM77020 contains further examples of
how to calculate general earnings in respect of duties performed in
the UK.
