Figure 3 relates to the taxation of overseas employment income only and is slightly different from Figure 1 that we looked at in Part 2. A UK resident but non-UK domiciled individual can only be taxed on the remittance basis in certain particular circumstances.
The rules set out in Part 2 in respect of the remittance basis apply equally here.
Where the costs of travelling to an overseas employment are borne by the employer, they are exempt from income tax provided the employee is absent from the UK wholly and exclusively for the purpose of performing duties that can only be performed outside the UK.
Travel costs borne by the employee are deductible from taxable employment income provided they relate to the start and/or the end of the period of overseas employment.
The costs of accommodation and subsistence whilst working overseas are not subject to income tax where they are borne by the employer.
Care must be taken when dealing with the remittance basis in relation to overseas employment income; simply being resident in the UK but domiciled overseas is not sufficient to enable the remittance basis to be claimed.
Written by a member of the P6 examining team
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