AECS
Rej. 01
The Secretary for the Civil Service, Government Secretariat,
Lower Albert Road,
Hong Kong.
20th May 1992
PCB)
Dear Sir,
Re: U.K. Tax on Terminal Leave Pay and Gratuity
for Civil Servants resuming U.K. Residence.
1.
The U.K. Inland Revenue have recently announced a change in interpretation effective from 1st April 1992. The result of this change is that income tax (schedule E) will be charged on leave pay and gratuity relating to days following resumption of U.K. residence.
2.
Residence will normally resume on the day of arrival in U.K. with the intention of residing and tax will be payable even if the leave pay and gratuity are paid in advance, since it will be deemed to relate to days of leave whilst resident in the U.K.
3. Attached is
extract from Taxation' which reprints the revised Statement of Practice. This as you will appreciate effectively reverses the situation which has existed for many years with respect to emoluments relating to Hong Kong service but paid or receivable following return to U.K. Attached also is a copy of 'Notes on United Kingdom Income tax Liability of Payments Made to Officers in Public or Social Service Overseas' 3 which was given on appointment to officers recruited in the U.K.
4. Many officers returning to U.K. have long periods of accrued leave brought about by their being unable to take their full entitlement when it became due, because of staff shortages, workload and the exigencies of the service generally.
-5. As this change has been brought about simply by a revised interpretation and not fresh legislation it has come about rather suddenly, with little publicity or opportunity to comment before implementation.
6.
The hardest hit officers will be those leaving Hong Kong shortly, having made their plans on the basis of our previous understanding that no U.K. tax would be payable on leave pay and gratuity earned in the service of the Hong Kong Government.
7. The Association therefore requests you to make a formal representation to the U.K. Inland Revenue urgently, to seek a concession for Hong Kong Government officers to the effect that all emoluments relating to employment in
in Hong
Kong are not
SERVICE
CIVIL
R & D
121 MAY 1992 »
C. F
ASSOCIATION OF EXPATRIATE CIVIL SERVANTS OF HONG KONG Room G12, Central Government Offices, East Wing, Lower Albert Road, Hong Kong Tel: 522-0568 Fax: 521-7923