The measure

Measures will be taken to prevent high–earning non-domiciled employees from avoiding tax by artificially splitting their remuneration between UK and foreign earnings through the use of dual contracts. By this means foreign contract income is usually exempt from UK income tax, unless it is remitted to the UK. The measures are subject to consultation but are expected to take effect from April 2014.

Who will be affected?

The measure is likely to affect a minority of mainly high earning foreign (non–domiciled) employees who are UK resident but whose jobs require them to spend a significant amount of time working abroad.


The measures are subject to consultation but are expected to take effect from April 2014.

Our view

This may not altogether stop the use of dual contracts: non-domiciled employees who work wholly abroad in a genuine foreign employment and who elect the remittance basis may remain exempt from UK income tax on their foreign earnings. However, HMRC have long objected to what they see as the artificial splitting of a single job into separate UK and foreign employments to save UK tax (and often also foreign tax) on the foreign income. Despite a general decline in the use of dual contracts, jobs continue to be split on the argument that work performed outside the UK can be attributed to a foreign contract of employment even if that does not correspond with the commercial reality of the employee's role. It is not yet known whether the so far unspecified measures will include making the UK employer accountable for PAYE and national insurance contributions on a "failed" offshore contract.

Research and insight

Major changes in UK tax Major changes in tax
The latest briefing paper on two major tax issues: international tax reform in the shape of BEPS, and transparency
European Tax Survey European Tax Survey
The findings of Deloitte's survey of tax professionals from almost 1,000 companies across Europe
Patent Box Patent Box
Think inside the box
UK GAAP The future of UK GAAP
What's changing?
Employment status Employment status
The challenges of engaging freelancers and temporary workers
Environmental Taxes Guide Environmental Taxes Guide
A starting point to map a business' environmental tax footprint
Sustainable tax strategy Sustainable tax strategy
Practical guide to help companies