SE35060 - Travelling expenses: employees working but not domiciled in the United Kingdom - the 5 year limit and meaning of a “qualifying arrival”

Section 195 (2), (3) and (4) ICTA 1988

The deductions described at SE35030 and SE35050 can only be given for journeys undertaken within a period of five years beginning with the date of a “qualifying arrival” in the United Kingdom by the employee to perform the duties of an employment.

Conditions for achieving a qualifying arrival

There is a “qualifying arrival” if either:

• the employee was Not Resident in the United Kingdom in either of the two tax years immediately before the year in which he or she arrived in the United Kingdom, (see example 2 below) or
• the employee was not in the United Kingdom for any purpose during the period of two years ending the day before he or she arrived here.

The two conditions apply separately. An employee may achieve a qualifying arrival by satisfying either one or the other.

Points to note regarding Condition 1

Where an employee satisfies the first condition in respect of more than one arrival in a year of assessment, the earliest qualifying arrival is the one that begins the five year period.

The first condition requires the employee to be Non Resident in either of the two tax years that precede the year of arrival not both.

Employees who do not become Resident in the United Kingdom in the years of assessment in which they come to perform duties in the United Kingdom may make a “qualifying arrival” in each year of assessment in which they come.

Example

The first condition is linked to tax years whereas the second is not. Thus an employee can be resident in the United Kingdom in 1998-99 but have a qualifying arrival in 2000- 2001 because he was not in the United Kingdom at all between 1 February 1999 and 31 January 2001. On the other hand, an employee may not be resident in the United Kingdom even if he spends some time here, say, on holiday. So he may still qualify under the first condition if he is debarred by the second.

More than one 5 year periods

An employee can qualify for more than one five-year period. For example, an American could work in the United Kingdom for five years from 1996 and for another five years from 2006. Provided that either of the “qualifying arrival” conditions was met before each of these periods of service, the employee could get deductions for their own and their family's travelling expenses in both periods.