Employees who are resident but not ordinarily resident in the UK
HMRC have confirmed that Statement of Practice 1/09 (SP) will continue to apply for a further year until 5 April 2011. The SP relates to employment income earned by a taxpayer who is resident but not ordinarily resident in the UK. The SP replaces an earlier version (SP 5/84) which was withdrawn with effect from 6 April 2009 following the changes to the remittance basis of taxation in Finance Act 2008.
The SP contains details of how HMRC will treat transfers from an offshore bank account which holds the income or gains relating to employment income. In addition the SP contains the rules for apportionment of earnings for a non-ordinarily resident taxpayer. These rules explain how earnings will be split when employment duties are performed both inside and outside the UK.
It was expected that relevant legislation would have been in place by April 2010 however this has not been possible given some outstanding issues. The Financial Secretary to the Treasury has therefore agreed to allow the SP to continue to apply for a further tax year.