SE31771 - The Schedule E expenses rule: expenses that are deductible from income charged under Case II or Case III of Schedule E: deductions from Case III income: foreign emoluments: example
An employee who is resident in the UK but domiciled in France has an employment with a Belgian employer the duties of which are performed wholly in Belgium. In 2000/2001 the emoluments from the employment total £30,000, of which £25,000 is received in the UK. The employee is entitled to
- capital allowances of £500 under Section 27(1) CAA 1990 , see SE36500 and
- a deduction of £2,800 for expenses under Section 198(1) ICTA 1988, see SE31630.
The emoluments of the employment are foreign emoluments and are excepted from charge under Case I of Schedule E by Section 192(2) ICTA 1988, see SE40102. The amount that is excepted from Case I is computed as follows:
| Total emoluments | £30,000 | ||
| Deductions from emoluments, see SE31770 | £500 + £2,800 | = | £3,300 |
| Excepted from Case I | £26,700 |
The amount liable to charge under Case III is £26,700 but
the charge is restricted to the amount received in the UK,
£25,000, see
SE40301.
The amount charged under Case I is nil, computed as
follows:
| Emoluments that are not excepted from Case I | £30,000 - £26,700 | = | £3,300 |
| Deducted from emoluments | £3,300 | ||
| Case I charge | Nil |
