Introduction Details of the Schedule Special charging rules for employment income
115.Paragraphs 57 to 71 amend certain provisions in ITEPA that charge various types of employment income to tax where the charge depends on the residence status of the taxpayer. The individual is charged for the overseas part of a year as if non-UK resident.
116.Paragraph 58 amends section 15 of ITEPA so that general earnings attributable to the overseas part of a split year are not charged to tax unless the earnings relate to duties performed in the UK or to overseas Crown employment that is subject to UK tax. Attribution of earnings between the two parts of the year is to be done on a just and reasonable basis.
117.Paragraph 59 amends section 22 of ITEPA to exclude general earnings taxable as chargeable overseas earnings on the remittance basis (as specified in section 23 of ITEPA) from the charge to tax on general earnings set by the amended section 15 of ITEPA. The provisions of section 22 are further amended by Schedule 46 on ordinary residence.
118.Paragraph 60 amends the definition of chargeable overseas earnings in section 23 of ITEPA to take into account whether a year is a split year. Attribution of earnings between the two parts of the year is to be done on a just and reasonable basis.
119.Paragraph 61 amends section 24 of ITEPA to take into account whether a year is a split year. Attribution of earnings between the two parts of the year is to be done on a just and reasonable basis.
120.Paragraph 62 amends section 26 of ITEPA so that it only applies to foreign earnings taxable on the remittance basis that are attributable to the UK part of a split year. Attribution of earnings between the two parts of the year is to be done on a just and reasonable basis. The provisions of section 26 are further amended by Schedule 46 on ordinary residence.
121.Paragraph 63 amends section 232 of ITEPA so that the deduction for mileage allowance relief is restricted where earnings include ‘excluded earnings’ within section 15 of ITEPA.
122.Paragraph 64 amends section 329 of ITEPA so that the limit on deductions from earnings allowable for a split year takes into account that overseas earnings for the overseas part of the year may have been excluded from the charge to tax.
123.Paragraph 65 amends the definition of ‘other relevant income’ in section 394 of ITEPA. Section 394 provides that the value of a relevant benefit that a person receives under an employer-financed retirement scheme (EFRBS) is chargeable to tax as employment income only to the extent that the value received exceeds ‘other relevant income’ which that benefit gives rise to.
124.Sub-paragraphs (2) and (3) of paragraph 65 provide that when a relevant benefit is received under an EFRBS the following amounts in respect of the EFRBS are included in ‘other relevant income’ to determine how much of the relevant benefit counts as employment income by virtue of section 394(1):
	Such amounts chargeable to tax as general earnings or counting as employment income under Chapter 2 of Part 7A of ITEPA (employment income provided through third parties) in any tax year and
	Such amounts that would have been chargeable to tax as general earnings but not so chargeable because the employee either was not resident in the UK or was entitled to split year treatment for any tax year and
	Such amounts that would have counted as employment income under Chapter 2 of Part 7A of ITEPA but did not so count because the employee either was not resident in the UK or was entitled to split year treatment for any tax year.
‘Relevant benefits’ are defined in section 393B of ITEPA and are most commonly but not exclusively received in connection with retirement. Part 3 of this Schedule makes provisions for split year treatment.
125.Paragraph 66 amends section 421E of ITEPA to set out the conditions attaching to the exclusions from charges under Chapters 2, 3 and 4 of Part 7 of ITEPA that apply to employment-related securities respectively acquired in a tax year of residence (new subsection (1)), in the UK part of a split year (new subsection (1A)) and in the overseas part of a split year (new subsection (1B)). It also amends section 421E so that the charges under Chapters 3A to 3D of Part 7 apply to employment-related securities if they were acquired in the overseas part of a year which is split under Case 1, 2 or 3 (as specified in paragraphs 44, 45 and 46) and, had it not been a split year, all or part of earnings (or if there had been earnings, those earnings) at the time of acquisition would have been general earnings under sections 15, 22 or 26 of ITEPA.
126.Paragraph 67 amends section 474 of ITEPA so that Chapter 5 (apart from sections 473 and 483) of Part 7 does not apply in the circumstances specified to an employment-related securities option respectively acquired in a tax year of residence (new subsection (1)), in the UK part of a split year (new subsection (1A)) and in the overseas part of a split year (new subsection (1B)).
127.Paragraph 68 amends section 554Z4 of ITEPA so that, where a tax year is split, the value of a relevant step is reduced by the amount of the value that is attributable to the overseas part of the year and is not in respect of UK duties. Attribution of value between the two parts of the year is to be done on a just and reasonable basis.
128.Paragraph 69 amends section 554Z6 of ITEPA so that relevant earnings are excluded from the application of section 554Z6 if they are earnings attributable to the overseas part of a split year and are not earnings relating to duties performed in the UK or to overseas Crown employment that is subject to UK tax.
129.Paragraph 70 amends section 554Z9 of ITEPA so that employment income of the UK part of a split year is treated in the same way as employment income of a full year of residence for the purposes of that section. The provisions of section 554Z9 are further amended by Schedule 46 on ordinary residence.
130.Paragraph 71 makes changes to section 554Z10 of ITEPA that are consequential to the changes made to section 554Z4 and introduces a new term ‘the overseas portion’ to identify the employment income not attributable to UK duties. The provisions of section 554Z10 are further amended by Schedule 46 on ordinary residence.