An individual works for an employer in the UK. The employer contributes £100,000 to an employee benefit trust (EBT) established in Jersey by the employer for the benefit of its employees. Having properly considered a request from the employer, the trustees of the EBT make a cash award of £100,000 to the employee in recognition of the employee’s work over the previous year. The award is paid to the employee in full by the trustees.
Payment of the cash award is a payment of PAYE income for the
purposes of the PAYE regulations. But the person making payment is
not resident in the UK and so is outside the jurisdiction of the
PAYE regulations.
The trustees of the EBT are trustees holding property for a
class of persons that includes the employee. So the payment is made
by an intermediary of the UK employer. Therefore, for the purposes
of the PAYE regulations, the UK employer is treated as making a
payment equal to the amount paid.
The trustees may voluntarily deduct and account for the amount of tax due in accordance with the PAYE regulations. If the trustees do so, although the payment of PAYE income is made by an intermediary, the UK employer is not treated as making a payment.
