Part 7A

Employment income provided through third parties
CHAPTER 2

Treatment of relevant step for income tax purposes

Employment income

Residence issues
554Z4
1
After the value of the relevant step is determined under section 554Z3, the particular tax year or years which the value of the relevant step is “for” are to be determined.
2
For this purpose, apply sections 16(1) to (4) and 17(1) to (3) as if the value of the relevant step were general earnings.
3
Subsection (4) applies if the value of the relevant step, or a part of it, is “for”—
a
a tax year for which A is non-UK resident, or
b
a tax year that is a split year as respects A.
4
The value, or the part of it, is to be reduced—
a
in a case within subsection (3)(a), by so much of the value, or the part of it, as is not in respect of
UK
duties, and
b
in a case within subsection (3)(b), by so much of the value, or the part of it, as is both—
i
attributable to the overseas part of the tax year, and
ii
not in respect of
UK
duties.
5
The extent to which—
a
the value, or the part of it, is not in respect of
UK
duties, or
b
so much of the value, or the part of it, as is attributable to the overseas part of the tax year is not in respect of
UK
duties,
is to be determined on a just and reasonable basis.
5A
Any attribution required for the purposes of subsection (4)(b)(i) is to be done on a just and reasonable basis.
5B
“
UK
duties
” means duties performed in the United Kingdom.
6
This section does not change the tax year for which the value of the relevant step counts as employment income under section 554Z2(1).
7
Subsections (8) and (9) apply if—
a
the relevant step is the payment of a lump sum,
b
the payment of the lump sum is the provision of a relevant benefit under an employer-financed retirement benefits scheme, and
c
the person by whom the lump sum is received is resident in the United Kingdom in the tax year in which the lump sum is received.
8
If the lump sum is wholly in respect of rights which have accrued on or after 6 April 2017, there is no reduction under subsection (4).
9
If the lump sum is wholly or partly in respect of rights which accrued before 6 April 2017, the amount of any reduction under subsection (4) is given by—
R × A/LS
where—
A is so much of the lump sum as is in respect of rights which accrued before 6 April 2017,
LS is the amount of the lump sum, and
R is the amount which (ignoring this subsection) is given by subsection (4) as the amount of the reduction.
10
In subsection (7)—
- “
employer-financed retirement benefits scheme
” has the same meaning as in Chapter 2 of Part 6 (see section 393A), and
- “
relevant benefit
” has the same meaning as in that Chapter (see section 393B).
Pt. 7A Ch. 2 excluded (6.4.2017) by The Sporting Testimonial Payments (Excluded Relevant Step) Regulations 2016 (S.I. 2016/1250), regs. 1(1), 2(1) (with reg. 2(2))
Pt. 7A Ch. 2 disapplied (with effect in accordance with reg. 1(2) of the amending S.I.) by The Employment Income Provided Through Third Parties (Excluded Relevant Steps) Regulations 2011 (S.I. 2011/2696), regs. 1(1), 3, 4
Pt. 7A inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 1
S. 554Z4(5A)(5B) inserted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 68(3)
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 29(1)
S. 554Z4(3)-(5) substituted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 68(2)
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 35(1)
Pt. 7A modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 35(6)
Pt. 7A modified (22.7.2020) by 2017 c. 32, Sch. 11 para. 1A(2)(6) (as inserted by Finance Act 2020 (c. 14), s. 16(3))
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 27(1)
Pt. 7A Ch. 2 excluded (22.7.2020) by 2017 c. 32, Sch. 11 para. 35ZA (as inserted by Finance Act 2020 (c. 14), Sch. 2 para. 38)
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 25
Pt. 7A Ch. 2 excluded (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 31
Pt. 7A modified (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 11 para. 1(8)
S. 554Z4(7)-(10) inserted (27.4.2017) by Finance Act 2017 (c. 10), Sch. 3 para. 7