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NOTES ON UNITED KINGDOM INCOME TAX LIABILITY ON PAYMENTS
MADE TO OFFICERS IN PUBLIC OR SOCIAL SERVICE OVERSEAS
INTRODUCTION
1. The Finance Act 1974 introduced important changes in the taxation of foreign income. These notes set out the position applicable from 6 April 1974.
2. It is assumed for the purposes of these notes that all the duties of the office or employment are performed wholly outside the United Kingdom and the Irish Republic, and that, whilst abroad, the officer does not continue to hold an office or employment under the Crown.
3.
These notes seek to cover the liability to United Kingdom income tax on the following payments
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payments made direct by the Overseas Development Administration in respect of inducement allowances, salary supplements and related gratuities, and
b. salary paid by the Overseas Government or Authority.
Liability to tax on these payments depends on:
a. the officer's residence and ordinary residence status
for United Kingdom tax purposes, and
b.
if the officer remains resident in the United Kingdom for United Kingdom tax purposes, the length of his absence from the United Kingdom.
RESIDENCE AND ORDINARY RESIDENCE
5.
General information about residence and ordinary residence for tax purposes is given in the booklet IR 20 issued by the Board of Inland Revenue and obtainable from any tax office. In the normal course, an officer who goes abroad for full-time service overseas will be regarded as not resident and not ordinarily resident from the day ollowing the date of his departure until the day preceding the date Jf his return, provided that:
a.
b.
the overall period of absence covers at least one United Kingdom tax year, and
return visits to the United Kingdom during this period for any purpose do not amount to 183 days or more in any one tax year or an average of 3 months or more per year during the period of service abroad.
6. Ordinary residence is broadly equivalent to habitual residence. A person who has his home here and spends his life here apart from occasional short visits abroad for business or pleasure is clearly ordinarily resident here. Moreover a person can remain ordinarily resident even though physically absent from the country throughout the year. A contract officer normally remains ordinarily resident in the United Kingdom except for those periods of duty abroad when he is treated as non-resident.
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7. It should also be noted that a person may be resident or ordinarily resident in two or more countries at the same time. cannot claim to be not resident or not ordinarily resident in the United Kingdom merely becauso in that tax year he is resident or ordinarily resident in another country.
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