Part 6

Employment income: income which is not earnings or share-related
Chapter 3

Payments and benefits on termination of employment etc.

Exceptions and reductions

Exception in certain cases of foreign service
413
A1
This section applies to a payment or other benefit if—
a
the payment or other benefit is within section 401(1)(a), and the employee or former employee is non-UK resident for the tax year in which the employment terminates, or
b
the payment or other benefit is within section 401(1)(b) or (c).
1
This Chapter does not apply if the service of the employee or former employee in the employment in respect of which the payment or other benefit is received included foreign service comprising—
a
three-quarters or more of the whole period of service ending with the date of the termination or change in question, or
b
if the period of service ending with that date exceeded 10 years, the whole of the last 10 years, or
c
if the period of service ending with that date exceeded 20 years, one-half or more of that period, including any 10 of the last 20 years.
2
In subsection (1) “foreign service” means service to which subsection (2A), (3), (4) or (6) applies.
2A
This subsection applies to service in or after the tax year 2013-14—
a
to the extent that it consists of duties performed outside the United Kingdom in respect of which earnings would not be relevant earnings, or
b
if a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
3
This subsection applies to service in or after the tax year 2003-04 but before the tax year 2013-14 such that—
a
any earnings from the employment would not be relevant earnings, or
b
a deduction equal to the whole amount of the earnings from the employment was or would have been allowable under Chapter 6 of Part 5 (deductions from seafarers' earnings).
3ZA
In subsection (2A)(a) “
relevant earnings
” means—
a
for service in or after the tax year 2025-26, earnings—
i
to which section 15 applies, and
ii
if the employee is a qualifying new resident for the purposes of Chapter 5C of Part 2 for that tax year, which are not qualifying foreign general earnings within the meaning of section 41T (qualifying foreign general earnings), and
b
for service before tax year 2025-26, earnings to which section 15 applies and to which that section would apply even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year.
3A
In subsection (3)(a) “
relevant earnings
” means—
a
for service in or after the tax year 2008-09, earnings—
i
which are for a tax year in which the employee is ordinarily UK resident,
ii
to which section 15 applies, and
iii
to which that section would apply, even if the employee made a claim under section 809B of ITA 2007 (claim for remittance basis) for that year, and
b
for service before the tax year 2008-09, general earnings to which section 15 or 21 as originally enacted applies.
4
This subsection applies to service before the tax year 2003-04 and after the tax year 1973-74 such that—
a
the emoluments from the employment were not chargeable under Case I of Schedule E, or would not have been so chargeable had there been any, or
b
a deduction equal to the whole amount of the emoluments from the employment was or would have been allowable under a foreign earnings deduction provision.
5
In subsection (4) “foreign earnings deduction provision” means—
a
paragraph 1 of Schedule 2 to FA 1974,
b
paragraph 1 of Schedule 7 to FA 1977, or
c
section 192A or 193(1) of ICTA.
6
This subsection applies to service before the tax year 1974-75 such that tax was not chargeable in respect of the emoluments of the employment—
a
in the tax year 1956-57 or later, under Case I of Schedule E, or
b
in earlier tax years, under Schedule E,
or it would not have been so chargeable had there been any such emoluments.
Word in s. 413(2) inserted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 38(2) (with Sch. 46 para. 73)
Words in s. 413(3) inserted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 38(4) (with Sch. 46 para. 73)
S. 413(2A) inserted (with effect in accordance with Sch. 46 para. 72 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 38(3) (with Sch. 46 para. 73)
S. 413(3A) inserted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 30(3)
S. 413(3)(a) substituted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 30(2)
S. 413(A1) inserted (with effect in accordance with s. 10(5) of the amending Act) by Finance Act 2018 (c. 3), s. 10(2)
S. 413(3ZA) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), s. 38(3), Sch. 8 para. 1(16) (with Sch. 8 Pt. 3)