Finance Act 2024

Substance based income exclusion: inter-jurisdictional employees and assets

21 (1) In section 196 (eligible payroll costs)—

(a) in subsection (1), in paragraph (c) for “those activities are substantially performed” substitute “at least some of the work is carried out”, and

(b) after that subsection insert—

“(1A) But where—

(a) an employee carries out the work in the period both in the territory in which the member is located and outside that territory, and

(b) the proportion of the time spent carrying out the work in that territory in the period is 50% or less,

the payroll costs in respect of the employee are to be multiplied by that proportion to determine how much of those costs are eligible payroll costs.”

(2) In section 197 (eligible tangible asset amounts) after subsection (6) insert—

“(6A) Where an asset falling within paragraph (a), (c) or (d) of subsection (6) is only located in the same territory as the member for part of the period—

(a) it is to be regarded for the purposes of this section as located in that territory for the whole period, but

(b) where the proportion of the period in which the asset (or in the case of a right, the asset to which the right relates) is located in the territory is 50% or less, the carrying values for the purposes of subsection (1)(a) and (b) are to be multiplied by that proportion.”