SE40006 - Effect of non-residence on pre-commencement and post-cessation emoluments

Section 19(1)4A ICTA 1988

Where the special rules in SE40005 apply the emoluments will be chargeable to tax if the employee or office holder is within Case I or II of Schedule E in the last or first year he held the job. The same is true if the taxpayer left the job at the time he went abroad.

Extra Statutory Concession A11(ESC A11) (see SE42850), which provides split year treatment, cannot be used to take out of charge an emolument which in substance relates to service in the United Kingdom. The same principle applies where the taxpayer takes up a new job on becoming resident in the United Kingdom.

In some cases however the taxpayer may leave his job after he ceases to be resident in the United Kingdom. Equally the job might start before the taxpayer arrives in this country. In these circumstances it may be reasonable to split the post-cessation or pre-commencement payment between the part of the year when the taxpayer falls within the Cases and the part he does not. But this split should not necessarily be made on a time basis. For example, the post-cessation receipt may be primarily attributable to the taxpayer's service in the United Kingdom. If it is, a split that reflects the facts should be agreed.

If the taxpayer is unable to agree, the alternative is an assessment of the emolument on the strict statutory basis, that is, without the benefit of ESC A11. The entire sum is chargeable to tax if the taxpayer is within Case I for the whole year because he is resident and ordinarily resident for the year.

See example SE40007 for illustrations of the application of Section 19(1)4A.