Net earnings from abroad

My (British) client is having to move back to the UK after living in Asia for five years or more. They work remotely and are employed by a company in the EU. They are paid less than the UK minimum wage and would like to claim UC on their return.

Reg 55 disregards any amounts paid “by way of income tax”. Is this general enough to cover income tax paid in other countries?

I am sure there are plenty of broader legal, tax and benefit issues which arise from this sort of cross-border employment arrangement which I wouldn’t claim to know the answers to.

On the narrow point though, I agree with you that “income tax” is used in the regs in a generic sense and is not further defined (c.f. NI contributions which are defined by reference to a UK statute) so I don’t see why it could not cover an income tax paid to another state.

In reg.55(2) employed earnings are defined as being:

“2) Employed earnings comprise any amounts that are general earnings, as defined in section 7(3) of ITEPA, but excluding—

(a)amounts that are treated as earnings under Chapters 2 to 11 of Part 3 of ITEPA (the benefits code); and
(b)amounts that are exempt from income tax under Part 4 of ITEPA.

As such, when considering employed earnings under reg.55(5)(b) and income tax, wouldn’t that imply that you’d need to look at Income Tax (Earnings and Pensions) Act 2003 as this deals with the application of income tax in all different kinds of scenarios?