If you work for the Crown, for example as a diplomat, a civil servant or a member of HM armed forces, your Crown pay for duties performed abroad stays taxable in the UK in full, whether or not you are UK resident and however long the posting lasts. This comes from section 28 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), which makes such earnings chargeable under section 15 if you are resident and section 27 if you are not, and keeps them outside the foreign earnings rules and overseas workday relief.

Tax investigation insurance from £108.75 a year (£9.06 a month).Pays up to £100,000 of your accountant's fees if HMRC opens an enquiry. No excess. Buy online in a few minutes.

See my price in 2 questionsHow the cover worksAccountant? Offer cover to your clientsor call 01795 841 310

Who counts as a Crown servant?

Section 28(2) ITEPA defines Crown employment as employment under the Crown which is of a public nature and whose earnings are payable out of the public revenue of the United Kingdom, Wales, Scotland or Northern Ireland. The references to Wales and Scotland were added by the Finance Act 2025 for 2025 to 2026 onwards. GOV.UK guidance gives HM armed forces, civil servants and diplomats as examples.

The definition is narrower than “public sector”. HMRC’s manual at RFIG30930 says a Crown employee holds an office or employment under the Crown, such as a member of the armed forces, a civil servant or a diplomat, and does not include doctors and nurses working for their local NHS Trust, teachers employed by a local education authority, or employees of government agencies and non departmental public bodies. Those workers are taxed under the normal rules for employees abroad.

Why is Crown pay taxed in the UK whatever your residence status?

For most employees, residence decides how much of their pay the UK can tax. A non resident is normally taxed only on pay for duties performed in the UK. Crown servants are carved out of that rule by three provisions:

  • Section 27 charges non residents on general earnings in respect of UK duties and on general earnings from overseas Crown employment subject to UK tax. The full amount received in the year is taxable.
  • Section 15 charges UK residents on all their general earnings. In a split year, earnings for the overseas part are normally excluded, but section 15(1A) keeps overseas Crown earnings in charge.
  • Section 26, the foreign earnings rule, specifically excludes general earnings from overseas Crown employment subject to UK tax.

HMRC sums up the practical result at EIM40205: the general earnings of Crown servants are subject to UK tax irrespective of residence status or where the duties are performed. The GOV.UK guidance puts it as paying UK income tax on your Crown income as if you live in the UK, no matter how long you are abroad, where you work or how settled you are.

Worried about an HMRC check? Tax investigation insurance pays your accountant’s fees if HMRC opens an enquiry or compliance check. Solar Protect cover pays up to £100,000 with no excess. It never pays tax, interest or penalties.

From £108.75 a year (£9.06 a month) for individuals, £117.57 for sole traders and £207.50 for companies and partnerships, including IPT and the £20 admin fee.

See my price in 2 questions or call 01795 841 310.

★★★★★ Rated 4.9 out of 5 on Trustpilot from over 160 reviews

Does residence still affect a Crown servant at all?

Yes. The statutory residence test still decides your residence status, and a diplomat or service member posted abroad may well be non resident under it, for example through the full time work abroad test, since work is treated as done where it is actually done. What residence does not change is the tax on the Crown pay itself. GOV.UK says any other UK income is taxed under the rules for people working abroad, so your residence status still governs how your other income is treated; see UK income tax for non residents.

Can a non resident Crown servant claim the personal allowance?

Section 56 of the Income Tax Act 2007 allows a non resident to claim the personal allowance if, at any time in the tax year, they are or have been employed in the service of the Crown, or their late spouse or late civil partner was. A UK or EEA national also qualifies under the same section. See personal allowance for non residents.

Are any Crown employees abroad outside UK tax?

Section 28(5) lets HMRC make an order excluding certain earnings, having regard to the government’s international obligations. The order in force from 12 May 2015, reproduced at EIM40209, excludes general earnings from overseas Crown employment for an employee who:

  • is not resident in the UK
  • was engaged outside the UK, and
  • is employed in a grade whose maximum pay is less than the maximum pay of a senior executive officer, or equivalent, in the same department working in inner London.

This covers locally engaged, lower paid staff at embassies and other posts abroad. HMRC says it derives from an old concession, ESC A25. The exclusion does not apply to Queen’s Gurkha Officers or other members of the Brigade of Gurkhas recruited in Nepal, or to members of the Royal Gibraltar Regiment.

Which allowances are tax free?

  • Foreign service allowance. Section 299 ITEPA exempts an allowance paid to a Crown employee that is certified to represent compensation for the extra cost of having to live outside the UK to perform the duties. The certificate must come from one of the ministers listed, including the Treasury and a Secretary of State.
  • Operational Allowance. Section 297A ITEPA exempts the Operational Allowance paid to members of the armed forces, designated under a Royal Warrant made under section 333 of the Armed Forces Act 2006.

Basic pay and other allowances that do not meet these conditions remain taxable.

Which reliefs are not available?

Because their earnings are kept within UK tax, Crown servants cannot use the reliefs designed for overseas work:

  • Overseas workday relief does not apply, because qualifying foreign general earnings exclude earnings from overseas Crown employment subject to UK tax (EIM43565).
  • The Seafarers’ Earnings Deduction is not available to Crown servants (EIM40205).

What about double taxation and National Insurance?

GOV.UK says that if the UK has a double taxation agreement with the country where you work, it will usually prevent you being taxed in both. On National Insurance, it says Crown servants pay contributions as normal for some or all of their time abroad, depending on the job and any special rules for the country concerned. Our guide to National Insurance when working abroad covers the general rules.

What does a worked example look like?

Illustration only.

Person Facts Crown pay
Major Ellis Army officer posted to Germany for three years, non resident under the SRT, also lets a flat in the UK Taxable in the UK in full under section 27; rental income taxed under the non resident rules; personal allowance available under section 56
Ana Spanish resident hired in Madrid as a junior administrative assistant at the British Embassy, grade capped well below a senior executive officer Excluded from UK tax by the section 28(5) order
Dr Shah NHS Trust consultant seconded abroad Not Crown employment; normal residence based rules apply

What mistakes do people make?

  • Assuming that becoming non resident makes a Crown salary tax free in the UK.
  • Treating every public sector employee as a Crown servant, or the reverse.
  • Claiming overseas workday relief or split year treatment to remove Crown pay from charge.
  • Not claiming the personal allowance while non resident.
  • Treating every overseas allowance as exempt when only certified foreign service allowances and the Operational Allowance qualify under these sections.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.