Income Tax Act 2007 section 809RA

Special mixed fund rules for certain employment cases

Section 809RA sets out special rules for determining the composition of transfers from a qualifying overseas account where a remittance basis user has both UK-taxable employment earnings and foreign employment earnings from the same employment paid into that account in the same tax year.

• The rules apply where an individual has general earnings from the same employment that include both UK-taxable earnings (section 15(1) ITEPA 2003) and foreign earnings on the remittance basis (section 26(1) ITEPA 2003), and at least some of each type are paid into a qualifying account in the same tax year.
• All remittance transfers (condition A transfers) from the account in the tax year are treated as a single transfer at year end, and all other transfers are treated as a single offshore transfer immediately afterwards, so that the standard mixed fund ordering rules can be applied to determine how much taxable income or gains each transfer contains.
• Where the account only qualifies for part of the tax year — for example because it was opened or ceased to be a qualifying account mid-year — the tax year is split so that the special rules apply only to the qualifying period.
• A condition A transfer is one that amounts to a remittance to the UK; any transfer that is not a remittance (or is not expected to become one by best estimate at year end) is classified as an other transfer and treated as an offshore transfer.