HMRC has published draft legislation on the artificial use of dual contracts by non-domiciles, for comment by 13 February 2014.

This legislation, set to be introduced in Finance Bill 2014, aims to tax certain overseas earnings and employment income of non-domiciled individuals on the 'arising' basis.

Income caught by this measure will no longer be eligible for remittance basis tax treatment.

In most cases, this will apply where separate employment contracts have been artificially arranged to obtain a tax advantage (dual contracts).

Foreign tax credit relief available against any UK tax charge will be available in the usual way and income from each overseas employment will be considered independently.

The legislation, which will have effect for general earnings from an overseas employment, income from overseas employment-related securities and overseas employment income provided through third parties arising on and after 6 April 2014 (ie, tax year 2014-15 onwards), will not apply to overseas income that falls within the three-year period for Overseas Workday Relief set out at section 26 ITEPA 2003.

If income associated with an overseas employment falls outside the parameters of this legislation, the existing rules will continue to apply.

Draft legislation and supporting documents are available here