SE33032 - Foreign Earnings Deduction (FED) meaning of "United Kingdom"

Section 830 and Paragraph 5 Schedule 12 ICTA 1988

The 'United Kingdom' includes:

• England
• Wales
• Scotland
• Northern Ireland

The territorial sea extending 12 miles out from the shore-line are also part of the United Kingdom for tax purposes.

The designated areas

The Continental Shelf Act (1964) identified certain areas of the North Sea and North Atlantic as being within the jurisdiction of the United Kingdom for the purposes of oil and gas exploration and exploitation. Section 830(5) ICTA 1988 deemed that any emoluments arising from employment duties performed in a designated area in connection with exploration and exploitation activities shall be treated as if they arose from duties performed in the United Kingdom.

Effect of Section 830(5) on location of duties for FED purposes

Paragraph 5 Schedule 12 deems that for the purposes of deciding whether duties of the employment have been performed outside the United Kingdom, a designated area shall be treated as part of the United Kingdom. In consequence, employees who work on oil and gas rigs in the North Sea are regarded for the purposes of the FED as performing duties in the United Kingdom. However, different treatment applies when identifying days of absence for the purpose of calculating a qualifying period.

Effect of Section 830(5) on Paragraph 3 Schedule 12 – absence for the purposes of calculating a qualifying period

Paragraph 3 of Schedule 12 does not contain a reference to Section 830 ICTA nor the designated areas. In consequence if an employee is in a designated area at midnight then the day that ended at midnight is a day of absence from the United Kingdom for the purposes of calculating a qualifying period.

Difficulties

See SE33102 for guidance on the treatment of oil and gas workers before 17 March 1998 and SE33222 for the period on and after that date.