Finance Act 1974

Section 21.

SCHEDULE 2 Deductions or Exception in Respect of Certain Emoluments

Duties wholly performed outside the United Kingdom

1 (1) Where the duties of an office or employment are performed wholly outside the United Kingdom and are performed wholly or partly while the holder of the office or employment is absent from the United Kingdom for a continuous period, a deduction shall be allowed in charging tax on the emoluments from that office or employment under Case I of Schedule E.

(2) The deduction shall, in a case falling within sub-paragraph (3) below, be equal to the whole, and, in any other case, be equal to one-quarter, of so much of the amount of the emoluments as is attributable to the continuous period.

(3) A case falls within this sub-paragraph if the continuous period during which the holder of the office or employment is absent from the United Kingdom, including any part of it falling outside the year of assessment, includes 365 or more qualifying days ; and for this purpose a day is a qualifying day if on that day he is the holder of that or any other office or employment the duties of which are, in the year of assessment to which that day belongs, performed wholly outside the United Kingdom.

(4) Where emoluments from an office or employment the, duties of which are wholly performed outside the United Kingdom are paid for a period of leave immediately following a period of continuous absence from the United Kingdom, they shall be attributed for the purposes of this paragraph to that period of absence but shall for other purposes of Case I of Schedule E be treated as emoluments for duties performed outside the United Kingdom during the period of leave.

2 For the purposes of paragraph 1 above a period in which the holder of an office or employment is absent from the United Kingdom is continuous unless during that period he is present in the United Kingdom—

(a) on more than sixty-three consecutive days ; or

(b) on more days (whether consecutive or not) than one-sixth of the number of days in the period ;

and he shall be treated as present in the United Kingdom throughout any day on which he arrives there but as absent from the United Kingdom on any day on which he departs from there.

Foreign emoluments

3 (1) Subject to paragraph 4 below, where the emoluments from an office or employment are foreign emoluments within the meaning of paragraph 1 of Schedule E, a deduction shall be allowed in charging tax on them under Case I or II of that Schedule.

(2) The deduction, except in a case falling within sub-paragraph (3) below, shall be equal to one-half of the amount of the foreign emoluments.

(3) Where the year of assessment is the year 1976-77 or a subsequent year and the holder of the office or employment—

(a) is in that year resident in the United Kingdom ; and

(b) was resident in the United Kingdom in the preceding ten years of assessment or in nine of them ;

the deduction shall be equal to one-quarter of the amount of the foreign emoluments.

4 Where the duties of an office or employment are performed wholly outside the United Kingdom and the emoluments from the office or employment are foreign emoluments within the meaning of paragraph 1 of Schedule E, the emoluments shall be excepted from Case I of that Schedule.

Amount of emoluments

5 For the purposes of the preceding paragraphs the amount of any emoluments shall be taken to be the amount remaining after any capital allowance and after any deductions allowable under Chapter I of Part VIII or section 208(1) of the Taxes Act, section 21(4) or 22(2) of the [1970 c. 24.] Finance Act 1970, or under paragraph 6 below.

6 Where the emoluments from an office or employment are foreign emoluments within the meaning of paragraph 1 of Schedule E and it appears to the Board, on a claim made by the holder of the office or employment, that out of those emoluments he has made payments in circumstances corresponding to those in which the payments would have reduced his liability to income tax, the Board may allow those payments as a deduction in computing the amount of the emoluments.