Section 23 Calculation of “chargeable overseas earnings”

United Kingdom

(1)

This section applies for calculating how much of an employee’s general earnings for a tax year are “chargeable overseas earnings” for the purposes of F1section 22.

F2(1A)

But none of an employee's general earnings from an employment for a tax year are to be “chargeable overseas earnings” if section 24A applies in relation to the employment for the tax year.

(2)

General earnings for a tax year are “overseas earnings” for that year if—

F3(a)

section 809B, 809D or 809E of ITA 2007 (remittance basis) F4applied to the employee for that year,

(F5aa)

the employee F6did not meet the requirement of section 26A for that year,

(b)

the employment F7was with a foreign employer, and

(c)

the duties of the employment F8were performed wholly outside the United Kingdom.

(3)

To calculate the amount of “chargeable overseas earnings” for a tax year—

F9Step 1

Identify—

(a)

in the case of a tax year that is not a split year, the full amount of the overseas earnings for that year, and

(b)

in the case of a split year, so much of the full amount of the overseas earnings for that year as is attributable to the UK part of the year.

Step 2

Subtract any amounts that would (assuming they were taxable earnings) be allowed to be deducted from F10the earnings identified under step 1 under—

(a)

section 232 or Part 5 (deductions allowed from earnings),

F11(b)

sections 188 to 194 of FA 2004 (contributions to registered pension schemes), or

(d)

section 262 of CAA 2001 (capital allowances to be given effect by treating them as deductions from earnings).

Step 3

Apply any limit imposed by section 24 (limit where duties of associated employment performed in UK).

The result is the chargeable overseas earnings for the tax year.

F12(4)

Any attribution required for the purposes of step 1 or step 2 in subsection (3) is to be done on a just and reasonable basis.

Annotations

Textual amendments

F1: Word in s. 23(1) substituted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 15(2)
F2: S. 23(1A) inserted (with effect in accordance with Sch. 3 para. 7(1) of the amending Act) by Finance Act 2014 (c. 26), Sch. 3 para. 2
F3: S. 23(2)(a)(aa) substituted for s. 23(2)(a) (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 15(3)
F4: Word in s. 23(2)(a) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), s. 40(4), Sch. 9 para. 3(5)(a)
F5: S. 23(2)(aa) substituted (with effect in accordance with Sch. 46 para. 25 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 8 (with Sch. 46 para. 26)
F6: Words in s. 23(2)(aa) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), s. 40(4), Sch. 9 para. 3(5)(b)
F7: Word in s. 23(2)(b) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), s. 40(4), Sch. 9 para. 3(5)(c)
F8: Word in s. 23(2)(c) substituted (for the tax year 2025-26 and subsequent tax years) by Finance Act 2025 (c. 8), s. 40(4), Sch. 9 para. 3(5)(d)
F9: Words in s. 23(3) substituted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 60(2)
F10: Words in s. 23(3) substituted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 60(3)
F11: Words in s. 23(3) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 55 (with Sch. 36)
F12: S. 23(4) inserted (with effect in accordance with Sch. 45 para. 153(2) of the amending Act) by Finance Act 2013 (c. 29), Sch. 45 para. 60(4)

Notes on Part 2

Modifications

C1: Pt. 2 applied (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 969(4)(a), 1329(1) (with Sch. 2 Pts. 1, 2)
C2: Pt. 2 applied (E.W.S.) (31.3.2017) by The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (S.I. 2017/353), reg. 1(1), Sch. 1 para. 4(3) (with reg. 2(4)(5))

Notes on Chapter 5

Textual amendments

F1: Pt. 2 Ch. 5 title substituted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 10

Notes on Remittance basis rules for employees outside section 26

Textual amendments

F1: S. 21 cross-heading substituted (with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 12
F2: Words in cross-heading substituted (with effect in accordance with Sch. 46 para. 25 of the amending Act) by Finance Act 2013 (c. 29), Sch. 46 para. 7(2)(b) (with Sch. 46 para. 26)