How is foreign employment income taxed in the UK?
Answered 17 March 2026
Here is a comprehensive answer on how foreign employment income is taxed in the UK, structured by the employee's residence and domicile status.
What the law says
The taxation of foreign employment income in the UK depends primarily on the employee's residence and domicile status, and where the duties of employment are performed.
1. UK Resident and Domiciled Employees (Arising Basis)
Under s.15 ITEPA 2003, the full amount of general earnings received in a tax year is taxable as "taxable earnings" where the employee is UK resident — regardless of whether the duties are performed in the UK or abroad. This means a UK resident and domiciled employee is taxed on worldwide employment income as it arises.
2. UK Resident but Not Domiciled Employees
The applicable charging provision depends on whether the employee meets the conditions of s.26A ITEPA 2003 (i.e., has 3 recent years of non-residence):
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Meets s.26A conditions (Overseas Workday Relief): Earnings for UK duties are taxed under s.15 in the year received; earnings for overseas duties ("foreign earnings") are taxed only when remitted to the UK, under s.26(2) ITEPA 2003.
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Does not meet s.26A conditions: Earnings other than "chargeable overseas earnings" are taxed under s.15 in the year received. "Chargeable overseas earnings" — defined in s.23 ITEPA 2003 as earnings from a foreign employer where duties are performed wholly outside the UK and the employee uses the remittance basis — are taxed only when remitted to the UK, under s.22(2) ITEPA 2003.
3. Non-Resident Employees
Under s.27 ITEPA 2003, a non-resident employee is only subject to UK tax on general earnings in respect of duties performed in the UK (or overseas Crown employment subject to UK tax). The full amount of such earnings received in a tax year is taxable. Earnings for duties performed wholly abroad are not subject to UK tax.
HMRC guidance / practice
Arising Basis vs Remittance Basis
HMRC confirms that when an individual is liable to UK tax on the arising basis (AB), they are taxed on earnings from any employment, whether duties are carried out in the UK or abroad. If an individual uses the remittance basis (RB), UK employment earnings are still taxed in the UK, but earnings from employment abroad are only taxed if remitted to the UK.
Important: From 6 April 2025, the remittance basis of taxation is no longer available.
Non-Resident Employees
HMRC confirms that although a non-resident individual may still pay UK tax on employment duties carried out in the UK, they will not pay UK tax on duties carried out wholly abroad. Where duties are split between the UK and abroad, only the UK portion is liable to UK tax.
There are special rules that can deem duties to have been performed in or outside the UK, including where UK duties are merely incidental to an overseas employment.
Overseas Workday Relief (OWR)
For qualifying new residents (those with 3 recent years of non-residence), Overseas Workday Relief under s.26 ITEPA 2003 allows employment income relating to duties performed overseas to be taxable only to the extent it is remitted to the UK. From 6 April 2025, employees must make an OWR election for a qualifying year before claiming relief in their Self Assessment return.
Chargeable Overseas Earnings (s.22)
Where a resident non-domiciled employee does not have 3 recent years of non-residence, s.22 applies to earnings from a foreign employer where duties are performed wholly outside the UK. The entire amount from such overseas employment is deemed "chargeable overseas earnings" and the UK tax charge is restricted to the amount remitted to the UK.
Summary Table
| Employee Status | Charging Provision | Basis of Tax |
|---|---|---|
| Resident & domiciled | s.15 ITEPA 2003 | Full worldwide earnings (arising basis) |
| Resident, not domiciled, meets s.26A | s.15 (UK duties) / s.26 (overseas duties) | Overseas duties taxed on remittance only |
| Resident, not domiciled, does not meet s.26A | s.15 / s.22 (chargeable overseas earnings) | Overseas earnings (foreign employer, wholly overseas duties) taxed on remittance only |
| Not resident | s.27 ITEPA 2003 | UK duties only |
Citation sources
Resident: When an individual is liable to UK tax on the arising basis (AB), they are taxed in the UK on their earnings from any employments, whether their duties of employment are carried out in the UK or abroad. If an individual can and does choose to be liable to UK tax on the remittance basis (RB), their UK employment earnings are taxed in the UK but any earnings from employment abroad will only be taxed if they are remitted here. But, if an individual is resident and ordinarily resident in t
Part 2 Employment income: charge to tax Chapter 4 Taxable earnings: UK resident employees UK resident employees Earnings for year when employee UK resident 15 1 This section applies to general earnings for a tax year for which the employee is UK resident except that, in the case of a split year, it does not apply to any part of those earnings that is excluded. 1A General earnings are “excluded” if they— a are attributable to the overseas part of the split year, and b are neither— i general earni
Where an employee is either not resident (see EIM42802), or not domiciled (see EIM42804), in the UK for a tax year, it can be necessary to consider where employment duties were performed to determine the amount of general earnings for that year which are taxable when received. Section 15 ITEPA 2003 determines general earnings chargeable to income tax in respect of duties performed in the UK for any tax year in which the employee or office holder is resident in the UK. Section 27 ITEPA 2003 deter
yee is resident but not domiciled in the United Kingdom to the extent that they are chargeable overseas earnings for that year. The definition of chargeable overseas earnings is contained in section 23. These are earnings from an employment with a foreign employer where the employee has chosen to use remittance basis and the duties of the employment are performed wholly outside the UK. Certain incidental duties can be performed in the UK without bringing the earnings into charge under section 15
Type of earnings Years assessable Statutory authority Employee resident and domiciled in UK: money earnings The year the earnings are received Section 15(2) ITEPA 2003 Employee resident but not domiciled in UK and does not meet the conditions of section 26A: money earnings except chargeable overseas earnings The year the earnings are received Section 15(2) ITEPA 2003 Employee resident but not domiciled in UK and meets the conditions of section 26A: money earnings for UK duties The year the earni
Part 2 Employment income: charge to tax Chapter 5 Taxable earnings: remittance basis rules and rules for non-uk resident employees Employees not resident in UK UK-based earnings for year when employee not resident in UK 27 1 This section applies to general earnings for a tax year for which the employee is not resident in the United Kingdom if they are— a general earnings in respect of duties performed in the United Kingdom, ... b general earnings from overseas Crown employment subject to United
The question of the existence or otherwise of an employment usually arises for tax purposes where there is doubt over whether income derives from employment or self-employment. Once it has been established that an individual performs services as an employee, there is generally little difficulty in attributing earnings to a particular employment relationship. The Employment Income parts of the Income Tax (Earnings and Pensions) Act 2003 (‘ITEPA’) charge to tax earnings “from” employment. Although
Before 6 April 2013, for individuals who were UK domiciled but not ordinarily resident (NOR), the remittance basis only applied to foreign income. The remittance basis applied to both foreign income and foreign capital gains for individuals who are not domiciled within the UK (ND). From 6 April 2013 the concept of ordinary residence was removed from the statue for most tax purposes. For tax years 2013-2014 onwards the remittance basis could only be claimed by people who are not domiciled in the