Income Tax (Earnings and Pensions) Act 2003 section 414

Reduction in other cases of foreign service

Section 414 provides a proportionate tax reduction for termination payments where the employee's service included time working overseas, but the foreign service was not extensive enough to qualify for the full exemption under section 413.

• Where an employee's service included some foreign service but not enough to qualify for full exemption, a proportionate reduction in the taxable amount may be claimed
• The reduction fraction equals the length of foreign service divided by the total length of service before termination
• The reduction applies to amounts treated as earnings under section 402B(1) or counted as employment income under section 403 (i.e. amounts above the £30,000 threshold)
• The relief cannot reduce the person's income tax liability below the amount they are entitled to deduct, retain or charge against tax on other payments such as gift aid donations