SE40002 - The Cases of Schedule E

Section 19(1)1 ICTA 1988

The circumstances of the employee or office holder (see SE40001) are used to categorise the application of Schedule E into three groups. The legislation names these groups:

Case I, Case II and Case III.

Emoluments from an office or employment falling into one or more of the Cases are chargeable to income tax under Schedule E. Any emoluments which do not fall in any of the Cases are not chargeable to United Kingdom income tax.

Summaries of the three Cases and the relevant instructions are as follows:

Case I

all emoluments for any year of assessment which the employee or office holder is resident and ordinarily resident in the United Kingdom, except foreign emoluments where the duties are performed wholly outside the United Kingdom (see SE40101).

Case II

all emoluments in respect of duties performed in the United Kingdom for any year of assessment in which the employee or office holder is not resident (or, if resident, not ordinarily resident) in the United Kingdom (see SE40201).

Case III

all emoluments for any year of assessment in which the employee or office holder is resident in the UK (whether or not ordinarily resident there) so far as the emoluments are received in the UK (see SE40301).

The year that emoluments are “for”

The three Cases do not indicate the year of assessment in which emoluments are assessable. They merely tell you whether or not the emoluments fall within the scope of the charge to Income Tax. They do so by reference to the taxpayer's circumstances in the tax year that the emoluments are “for”.

The year that an emolument is “for” is the year in which it is earned or the year in which entitlement arises. The circumstances listed above must be considered in the year that the emoluments are “for” to decide whether the emoluments fall into one or more of the Cases.

For most employees the year that an emolument is “for” and the year in which it is received will be the same. However, when those years are different, an emolument that is within one of the Cases for the year it is earned is chargeable regardless of the year it is received or, for Case III, regardless of the year it is remitted to the United Kingdom.

Special rules provided by Section 19(1)4A ICTA provide that if an emolument is within one of the Cases it is chargeable even if the employment had not started when it was received or had ended before it was received (see SE40005).

Further guidance: