Income Tax (Earnings and Pensions) Act 2003 section 395C

Meaning of "foreign service" in section 395B

Section 395C defines what counts as "foreign service" for the purposes of the exemption or reduction available under section 395B for benefits from employer-financed retirement benefits schemes.

• From 2013–14 onwards, service qualifies as foreign service where duties are performed outside the UK and the earnings are not "relevant earnings", or where a full seafarers' earnings deduction applies
• For earlier periods back to 2003–04, and further back to 1974–75, different tests apply depending on whether earnings were taxable in the UK or qualified for a foreign earnings deduction
• "Relevant earnings" are defined differently depending on the period of service, with changes from 2025–26 reflecting new rules for qualifying new residents, and earlier periods referring to the remittance basis and ordinary UK residence
• Service before 1974–75 is foreign service if the employment earnings were not chargeable to tax under the old Schedule E rules

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