SE13050 - Termination payments and benefits: Section 148 ICTA 1988: foreign aspects: Nichols v Gibson (68 TC 611)

Section 148 ICTA 1988

You may come across a claim that Section 148 ICTA 1988 cannot apply to a payment because the ex-employee was not resident in the UK for tax purposes.

Section 19(1)1 ICTA 1988 contains detailed rules about how a person’s tax residence affects a Schedule E charge (see SE40001 for details). For example, a person who is resident and ordinarily resident in the UK will be taxed under Case I of Schedule E.

However, some Schedule E charges do not work through Section 19(1)1. Instead, they work through Section 19(1)5. This means that the detailed rules of the Cases of Schedule E are not relevant. Section 148 ICTA 1988 is one of these charges.

So you have to look at the Section itself to see how any “foreign” aspects of the situation are to be dealt with.

This means that someone “Not Resident” in the UK can be charged under Section 148 ICTA 1988, whereas through Section 19(1)1 such a person could only be charged on emoluments for UK duties under Case II of Schedule E (see SE40002). This position was confirmed in Nichols v Gibson (68 TC 611), in which a person “Not Resident” in the UK was taxed on a termination payment under Section 148 ICTA 1988.

But such a person may qualify for exemption from or reduction of the Section 148 ICTA 1988 charge: see SE13500 and following instructions for details.