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Advanced Taxation (UK) · Income tax: the scope of income tax, residence and overseas aspects

Overseas Workday and Employment Issues for Individuals

Updated 11 October 2026 · Fact-checked

Overseas workday issues ask what part of an employee's pay the UK can tax. First fix residence using the statutory residence test. Then split earnings between UK and overseas duties. A UK resident is generally taxed on worldwide earnings. A non-resident is taxed only on earnings for UK duties. Then check pension limits and NIC.

Understand Overseas Workday and Employment Issues for Individuals

Start with one idea: residence decides how much of your pay the UK taxes. A UK resident is generally taxed on employment income from all duties, wherever they are done. A non-resident is taxed only on earnings for duties performed in the UK. So every overseas employment question begins with the statutory residence test.

The test uses days spent in the UK and UK ties. The tax table gives the thresholds. For example, someone previously resident who spends 46 to 90 days in the UK is resident with 3 or more UK ties. Someone not previously resident who spends 16 to 45 days is automatically not resident. At 183 days or more, the person is automatically resident. Fewer than 16 days means automatically not resident.

The next step is the workday split. Earnings for a UK secondment are tied to UK duties, so they are taxable even if the person is non-resident. Earnings for duties done abroad are outside UK tax for a non-resident. A UK resident may be taxable on them too, and then you consider double tax relief. Where the question gives a specific relief or special regime for new arrivals, apply it exactly as the question states. Do not rely on memory of it.

Two side issues often appear. First, pensions. A secondee or expatriate may pay into a UK pension. Tax relief depends on earnings and the annual allowance. Second, NIC. Class 1 NIC depends on the person's position and the employment. Use the NIC table for rates, and state any assumption you make about liability.

The exam rewards a clear, ordered answer: residence, then taxable earnings, then reliefs, then side issues, then advice. Show each working and state your assumptions.

Key rules to remember

Statutory residence test: automatic outcomes
Under 16 days = automatically not resident; 183 days or more = automatically resident
These apply to both previously resident and not previously resident individuals. Use the table in the exam for the middle bands.
Not previously resident: ties needed
16-45 days: automatically not resident; 46-90: 4 ties; 91-120: 3 or more ties; 121-182: 2 or more ties
Resident if the ties shown are met. Check the 'previously resident' column separately, as the tie numbers are lower.
Previously resident: ties needed
16-45 days: 4 or more ties; 46-90: 3 or more; 91-120: 2 or more; 121-182: 1 or more
Same table, other column.
Workday apportionment
UK taxable earnings = total earnings × UK working days ÷ total working days
Use this when the question gives no other basis. State that you have apportioned on a working-day basis. Round to the nearest £.
Pension annual allowance
£60,000 standard (2023/24 to 2025/26); minimum allowance £10,000
Threshold income limit £200,000; adjusted income limit £260,000. The tax-relieved maximum with no earnings is £3,600.
Tapered annual allowance
Allowance = £60,000 - (adjusted income - £260,000) ÷ 2, not below £10,000
Applies only where threshold income exceeds £200,000 and adjusted income exceeds £260,000.
Class 1 NIC rates
Employee: 8% on £12,571-£50,270, 2% above. Employer: 15% above £5,000
Use only where the question makes the employment subject to UK Class 1 NIC.

How to solve Overseas Workday and Employment Issues for Individuals questions

Use this order for any overseas employment question. It matches how the marks are normally given.

  1. 1Identify the person: employee or secondee, UK or overseas employer, and the years in question. Note whether they were previously resident.
  2. 2Count UK days and list the UK ties the question gives. Apply the residence table and state the result for each tax year.
  3. 3Split earnings by where the duties are done. Use working days unless told otherwise. Label UK duties and overseas duties.
  4. 4Decide what is taxable: worldwide earnings for a resident, UK-duty earnings only for a non-resident. Apply any relief the question specifically mentions.
  5. 5Compute the tax using the rates and bands in the tax tables. Round to the nearest £ and show all workings.
  6. 6Deal with side issues: pension relief and annual allowance, NIC, and double tax relief for overseas tax suffered.
  7. 7Finish with a short conclusion or advice. Give assumptions, risks and any action the client or employer should take.

Quickest way: Residence first, then workday split

When to use it: Use this when time is short and the question gives days, ties and a salary figure.

  1. Write the residence conclusion in one line using the table. Give days, ties and the result.
  2. Write the taxable-earnings rule that follows: worldwide if resident, UK duties only if not.
  3. Do one apportionment line: salary × UK days ÷ total working days.
  4. Apply tax rates to that figure, then add one line on pension or NIC if asked.
  5. Add one sentence on assumptions, such as 'assuming the 2025/26 rates continue'.

Common mistakes in Overseas Workday and Employment Issues for Individuals

  • Taxing all earnings of a non-resident secondee

    Students see UK salary and assume everything is taxable.

    Fix: Decide residence first. If not resident, tax only earnings for UK duties.

  • Using the wrong column of the residence table

    The two columns have different tie numbers and are easy to mix up on a phone screen.

    Fix: Underline 'previously resident' or 'not previously resident' in the question before you read the table.

  • Counting calendar days instead of working days in the split

    Students rush and use 365.

    Fix: Use working days from the question. If none are given, say what basis you have used.

  • Ignoring the pension taper

    Students remember £60,000 and stop.

    Fix: Test threshold income against £200,000 and adjusted income against £260,000. Do not go below £10,000.

  • Forgetting to state assumptions and give advice

    Students focus on the calculation and skip the professional skills marks.

    Fix: Add a short conclusion with assumptions and what the client should do next.

Worked examples

Example 1

Anil is an overseas employee of a non-UK company. He has never been resident in the UK. In 2025/26 he is seconded to the UK and spends 100 days here, all working days. He has 2 UK ties. His annual salary is £120,000 and he works 250 days in the year. Is he UK resident, and what UK earnings are taxable?

Show the solution
  1. Residence: he is not previously resident and spends 91 to 120 days in the UK. The table says resident if 3 or more ties.
  2. He has only 2 ties, so he is not UK resident.
  3. A non-resident is taxed only on earnings for UK duties.
  4. UK working days are 100 out of 250, which is 40%.
  5. UK taxable earnings = £120,000 × 100 ÷ 250 = £48,000.

Answer: Anil is not UK resident. His taxable UK earnings are £48,000. Earnings for work done overseas are outside UK tax, assuming a working-day apportionment.

Example 2

Sara is a UK resident finance director. Her adjusted income for 2025/26 is £290,000 and her threshold income is £250,000. Total pension input is £70,000. She is an additional rate taxpayer. Compute her annual allowance and the charge on any excess.

Show the solution
  1. Threshold income £250,000 is above £200,000, so the taper test applies.
  2. Adjusted income £290,000 is above £260,000.
  3. Reduction = (£290,000 - £260,000) ÷ 2 = £15,000.
  4. Tapered allowance = £60,000 - £15,000 = £45,000. This is above the £10,000 minimum.
  5. Excess = £70,000 - £45,000 = £25,000, assuming no unused allowance is carried forward.
  6. The excess is taxed at her marginal rate of 45%: £25,000 × 45% = £11,250.

Answer: Her annual allowance is £45,000. The excess of £25,000 gives an annual allowance charge of £11,250, assuming no carry forward.

Exam tips

  • Always give the residence conclusion before any calculation. Many marks depend on it.
  • Quote the figures from the tax tables in the exam. Do not rely on memory of rates or limits.
  • Label UK and overseas earnings clearly in your workings, so a marker can follow part-marks.
  • State assumptions, such as that 2025/26 rates continue, since the supplementary instructions allow this.
  • Add a short recommendation at the end. Professional skills marks reward clear, practical advice.

Practice questions from Income tax: the scope of income tax, residence and overseas aspects

Overseas Workday and Employment Issues for Individuals: frequently asked questions

How are overseas workday earnings taxed for a UK resident?

A UK resident is generally taxed on employment earnings from all duties, wherever they are performed. Overseas tax suffered may qualify for double tax relief. If the question refers to a special relief for new arrivals, apply the conditions it states.

How are employees seconded to the UK taxed?

First test residence with the statutory residence test. If they are not resident, only earnings for UK duties are taxable. If they are resident, worldwide earnings are generally taxable.

What are the pension annual allowance limits for expatriates?

The tax tables give a £60,000 annual allowance for 2023/24 to 2025/26 and a £10,000 minimum allowance. The threshold income limit is £200,000 and the adjusted income limit is £260,000. The same rules apply whatever the person's residence, but relief depends on earnings.

Do I use 2026/27 rates in ATX-UK?

The exam instructions say to assume 2025/26 rates and allowances continue unless told otherwise. The exams in this period examine Finance Act 2025.