ERSM165225 - International from 6 April 2025: ascertaining chargeable and unchargeable foreign securities income - from 6 April 2025: Non-resident employees and split years
s41H, Chapter 5B of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)
The application of s41H(8) & s41H(9) Chapter 5B ITEPA has not changed as a result of the Finance Act 2025 changes.
Therefore, s41H(8) ITEPA continues to provide that, where an individual is not resident in the UK in a tax year which falls within a relevant period and the duties of the employment are carried out wholly outside the UK in that year, then any Securities Income accruing during that part of the relevant period is treated as unchargeable Foreign Securities Income and so is not chargeable to tax as employment income.
It should be noted that “not resident in the United Kingdom” has the meaning attached to it for UK tax purposes; a person who is resident in the UK and at the same time treaty non-resident would not fall within s41H(8) ITEPA. Please see RDRM12630 for the meaning of treaty non-resident.
Split years
S41H(9) continues to provide that, where any part of the relevant period is within the overseas part of a tax year that is a split year and the duties of the employment are carried out wholly outside the UK in that part of the relevant period, then any Securities Income accruing during that part of the relevant period is treated as unchargeable Foreign Securities Income and so is not chargeable to tax as employment income.
For a general discussion of split year treatment, Extra Statutory Concession A11 and its replacement by legislation in Schedule 45 of Finance Act 2013, see HMRC’s Guidance Note on the Statutory Residence Test - RDR3 (website) http://www.hmrc.gov.uk/international/rdr3.pdf.