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Finance Act 2014

Condition 3: The related employments test

11.New section 24A(8) sets out condition 3, which is that the UK employment and the relevant (i.e. overseas) employment are related to one another and new section 24A(9) contains provisions to assist in interpreting when a UK employment and a relevant employment will be “related”.

12.Some examples of scenarios in which HMRC would consider a UK employment and a relevant employment to be related to one another are:

  • Where it is reasonable to suppose that P’s UK employment would cease if their relevant employment ended.

  • Where P has two employments and undertakes client meetings, entertainment or marketing under the relevant employment and manages investments for the same clients under the UK employment.

  • Where P is employed in the UK and P’s contract specifies that P cannot work outside the UK. P is also employed in France, and P’s contract specifies that they can only work in France. P does the same type of work under their French contract as under their UK contract, so although these duties are separated geographically, the work is of the same type.

  • Where P provides financial advice to an individual under both a UK and relevant employment.

13.New section 24A(9)(f) and (10) provides that employments will be “related” where P has a senior position in at least one of their UK or overseas employments or with an associated employer. In deciding whether or not P meets this condition, regard must be had to their level of seniority compared with other employees in their organisation: to hold a senior position, P must either be a director who owns or controls more than 5% of their UK or relevant employer’s ordinary share capital, or be in the highest tiers of seniority or remuneration compared to other employees.

14.New section 24A(11) and (12) provide that the Treasury may amend new section 24A in respect of the “related employments” test by regulations. Any such regulations will be subject to the positive affirmation procedure by the House of Commons.

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