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Chargeable foreign earnings relief is being abolished, as part of the wider changes to the taxation of non-domiciled taxpayers.
Currently, under very limited circumstances, eligible non-domiciled employees of non-resident employers who perform all non-incidental duties of their employment outside the UK can obtain a deduction from their taxable income in respect of earnings related to this employment, provided the income is paid outside the UK and not remitted here. Unlike overseas workdays relief, which applies much more broadly, the relief is not specifically time limited and may be claimed for as long as the employee remains UK resident and non-domiciled (and not deemed domiciled) while filing on the remittance basis.
From 6 April 2025, the relief will no longer be available. Earnings subject to the relief before this date continue to be taxable on the remittance basis if brought to the UK but may be eligible for a reduced rate of tax under the temporary repatriation facility.
Non-domiciled employees of overseas employers who meet the narrow criteria for this relief and do not qualify for overseas workdays relief.
The relief will be abolished from 6 April 2025.
While some individuals may face increased income tax liabilities as a result of this change, the tightening of qualification conditions since 2014/15 means the number of people who are currently eligible for the relief and will be affected by its abolition will be small. This move is therefore not surprising in light of the wider reforms to the taxation of non-domiciles.