Part 6U.K.Employment income: income which is not earnings or share-related

Chapter 3U.K.Payments and benefits on termination of employment etc.

Exceptions and reductionsU.K.

414Reduction in other cases of foreign serviceU.K.

(1)This section applies if—

[F1(za)either—

(i)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

(ii)the payment or other benefit is within section 401(1)(b) or (c),]

(a)the service of the employee or former employee in the employment in respect of which the payment or other benefit is received includes foreign service, and

[F2(b)section 413(1) does not except the payment or other benefit from the application of this Chapter.]

(2)The taxable person may claim relief in the form of a proportionate reduction of the amount that would [F3otherwise—

(a)be treated as earnings by section 402B(1), or

(b)count as employment income as a result of section 403]

(3)The proportion is that which the length of the foreign service bears to the whole length of service in the employment before the date of the termination or change in question.

(4)A person’s entitlement to relief under this section is limited as mentioned in subsection (5) if the person is entitled—

(a)to deduct, retain or satisfy income tax out of a payment which the person is liable to make, or

(b)to charge any income tax against another person.

(5)The relief must not reduce the amount of income tax for which the person is liable below the amount the person is entitled so to deduct, retain, satisfy or charge.

(6)In this section “foreign service” has the same meaning as in section 413(2).