The 2014 Finance Bill will address the perceived abuse by high-earning non-domiciled individuals manipulating duties of a single employment between offshore and UK duties by the use of dual contracts.
Where tax is not payable on the overseas contract at a rate broadly equivalent to the individual’s UK tax rate, then the overseas employment income will be taxed on the arising basis in the UK. However the legislation has been revised to prevent a tax charge arising on dual contracts which are not motivated by tax avoidance.
No income tax charge will arise on income from employment duties performed in tax years up to 2014/15. Furthermore, no charge will arise on directors with less than a 5% shareholding in the employing company or on employments held for legal or regulatory reasons.
These changes will take effect from 6 April 2014.