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Overseas Locally-Engaged Staff

Volume 884: debated on Tuesday 21 January 1975

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asked the Chancellor of the Exchequer if he will make a statement about the liability to United Kingdom income tax of persons who are not resident in the United Kingdom and work abroad for United Kingdom Government Departments as locally-engaged unestablished staff.

For tax purposes the duties of an office or employment under the Crown which is of a public nature are normally treated as performed in the United Kingdom irrespective of where they are in fact performed. In the past, most locally-engaged unestablished staff have not been regarded as holding offices or employments of a public nature so as to be liable to United Kingdom income tax on their earnings, but a recent decision of the courts has shown that this long-standing practice is not correct in law.It would clearly be unjustifiable to impose United Kingdom tax liability on all locally-recruited staff working abroad. The Inland Revenue, with my approval, will therefore continue its existing practice of not taxing these earnings where the maximum rate of pay for the grade is less than that of an executive officer in the United Kingdom Civil Service working in inner London.