SE40007 - Effect of non-residence on pre-commencement and post-cessation emoluments: examples
Section 19(1)4A ICTA 1988
This page provides examples of how Section 19(1)4A is applied. Please refer to the sections listed below for general guidance:
| SE40005 | Section 19(1)4A Emoluments paid before employment has commenced or after it has ceased |
| SE40006 | Effect of non-residence on pre-commencement and post-cessation emoluments |
Example 1
An employee is approached by another employer. She is offered a
job by the new organisation. As an inducement to change jobs she is
paid £10,000 on 1 April 2000. She commenced work for the new
employer on 1 May 2000.
Section 19(1)4A operates to make the payment an emolument of
the year in which the employment commences. Even though paid in tax
year 1999/2000 it is an emolument “for” the year
2000/01.
Example 2
An employee worked in Singapore for many years for a United
Kingdom resident company. The employment ceased on 31 December
1999. For 10 years prior to that date the individual was
Not-Resident and Not Ordinarily Resident in the United Kingdom. On
6 April 2000 the employee returned to the United Kingdom. From the
date of arrival he became Resident and Ordinarily Resident.
6 months after the job ended the employer made a payment of
£10,000 to the former employee in recognition of the
contribution he had made to the expansion of business in the Far
East.
Section 19(1)4A makes the payment an emolument of the year in
which the employment was last held; 1999/2000. In that year the
employee was Not Resident in the United Kingdom and performed all
of the duties in Singapore. In consequence, the payment does not
fall into the Cases of Schedule E and is not chargeable to income
tax under that Schedule.
