Finance Act 1974

21 Cases I and II of Schedule E

(1) In paragraph 1 of Schedule E as set out in section 181(1) of the Taxes Act the following shall be substituted for Cases I and II:—

• “Case I: where the person holding the office or employment is resident and ordinarily resident in the United Kingdom, any emoluments for the chargeable period, subject, however, to the deduction or exception provided for in Schedule 2 to the Finance Act 1974 if in the chargeable period he performs the duties of the office or employment wholly outside the United Kingdom or the emoluments are foreign emoluments;

• Case II: where that person is not resident or, if resident, then not ordinarily resident in the United Kingdom, any emoluments for the chargeable period in respect of duties performed in the United Kingdom, subject, however, to the deduction provided for in Schedule 2 to the Finance Act 1974 if the emoluments are foreign emoluments;”

and in the words beginning with " The emoluments excepted from Cases I and II as foreign emoluments " for " excepted from " there shall be substituted " referred to in " .

(2) Where a person performs any duties of an office or employment in the United Kingdom, his emoluments from any other office or employment shall not be treated for the purposes of Case I of Schedule E as emoluments in respect of duties performed wholly outside the United Kingdom unless he shows that their amount would have been the same whether or not the duties of any office or employment which he performs in the United Kingdom were performed by him.

(3) In section 188(2) of the Taxes Act (exemptions and reliefs in respect of tax under section 187)—

(a) paragraph (b) and the words following paragraph (c) shall be omitted and paragraph (c) shall become paragraph (b); and

(b) for the words from the beginning to " (a) in any case, that" there shall be substituted the words

“Tax shall not be charged by virtue of section 187 above in respect of one-half of a payment in the case of which the conditions in paragraph to) below are satisfied and shall not be charged in respect of any payment in the case of which the conditions in paragraph (b) below are satisfied ; and those conditions are—

(a) that”and

(c) in the paragraph which becomes paragraph (b) for the words preceding " that the foreign service " there shall be substituted the words " that the payment is in respect of an office or employment in which the holder's service included foreign service and ".

(4) In Schedule 8 to the Taxes Act—

(a) in paragraph 6 the words " and not being a payment of compensation for loss of office " shall be omitted; and

(b) in paragraph 16 after the words " means service" there shall be inserted the words " before the year 1974-75 " and after sub-paragraph (b) there shall be inserted the words " or service after the year 1973-74 such that emoluments from the office or employment were not chargeable under Case I of Schedule E (or would not have been so chargeable, had there been any) or that a deduction equal to their whole amount was or would have been allowable under paragraph 1 of Schedule 2 to the Finance Act 1974 in charging them ".

(5) In section 221(4) of the Taxes Act, for the words from " but" to " employment for that year " there shall be substituted the words " but either—

(a) the circumstances in which he performs the duties of his employment are such that no tax is chargeable under Case I or II of Schedule E in respect of the emoluments of his employment for that year (or would have been so chargeable had there been any); or

(b) those emoluments are foreign emoluments within the meaning of paragraph 1 of Schedule E and the Board are satisfied, on a claim made by the employee, that the payments in question are made pursuant to a scheme or to a fund which corresponds to such a scheme or fund as is mentioned in subsection (1) or (2) above ".

(6) In Schedule 12 to the Taxes Act (double taxation relief: Republic of Ireland) in paragraph 3(3) of Part III, for the words " excepted from " there shall be substituted the words " referred to in " and for the words " shall not include " the words " shall be taken not to include ".

(7) For subsection (2) of section 24 of the [1970 c. 24.] Finance Act 1970 there shall be substituted the following subsection:—

“(2) Neither subsection (1) nor subsection (2) of the last preceding section shall apply for any year of assessment where the employee performs the duties of his employment in such circumstances that no tax is chargeable under Case I or Case II of Schedule E in respect of the emoluments of his employment (or would be so chargeable were there such emoluments) or where the emoluments from the employment are foreign emoluments within the meaning of paragraph 1 of Schedule E and the Board are satisfied, on a claim made by the employee, that the retirement benefits scheme in question corresponds to such a scheme as is mentioned in paragraph (a), (b) or (c) of subsection (1) above.”

(8) Schedule 2 to this Act shall have effect with respect to the deductions and exception referred to in Cases I and II of Schedule E as substituted by subsection (1) above.

(9) This section has effect for the year 1974-75 and subsequent years of assessment; but tax shall not be chargeable for any of those years under Case III of Schedule E on emoluments which, if this section had had effect for earlier years, would have fallen under Case I or Case II.