SE13705 - Termination payments and benefits: Section 148 ICTA 1988: 'foreign service': service before 6 April 1974

This guidance applies only if you have a case involving "foreign service" (see SE13680) and it includes service before 6 April 1974.

The rules about which emoluments fall within Case I were different before 6 April 1974. This may affect the calculation of full exemption ( SE13690) and will affect the calculation of a reduction ( SE13700).

In testing whether full exemption is due under SE13690 this difference is now likely to matter only for the first and last tests of exemption bulleted there (namely, where 3/4 of the whole period of service is needed to be "foreign service", or where 1/2 of the whole period including 10 of the last 20 years is needed). So

• consider the other test in SE13690 first. If the last 10 years are "foreign service" give the exemption without considering the pre-6 April 1974 period. If not
• assume that all the pre-6 April 1974 service is not "foreign service" and see whether either of the other two tests in SE13690 is satisfied. If either of them is met, give the exemption without considering the pre-6 April 1974 period. Otherwise
• if none of the three tests in SE13690 are satisfied without considering some of the pre-6 April 1974 period, see below to find out whether the emoluments of that period count as "foreign service". Then apply the first (and if necessary the third) bulleted test in SE13690.

In testing whether reduction of charge is due under SE13700, any service before 6 April 1974 will affect the calculation. See below to find out whether the emoluments of that period count as "foreign service". Then finish the calculation required by SE13700.

Periods of service before 6 April 1974 count as "foreign service" if the emoluments were not chargeable under Case I of Schedule E. For this period, treat the emoluments as chargeable under Case I if they were for an employee who was Resident and Ordinarily Resident in the UK and who did not perform all their duties outside the UK. But note that the emoluments were not within Case I if they were "foreign emoluments" (see SE40031).