EP8252 - International employments: Part3: Subjects needing special care: Tax equalised arrangements under EP Appendix 6 - Other aspects
How does the employer calculate the amount of tax to be remitted?
The employer calculates the tax on PAYE lines by grossing up the net pay and taking into account any UK coding allowances due to the employee. This is done using Tax Table G, which is a special table used for employees who receive payment free of tax.
The sections on ‘Free of Tax Payments’ and ‘Free of Tax System’ within the PAYE Manual show how Tax Tables G are used to calculate the tax to be remitted.
Employer’s commitment
Employers must take responsibility for any errors that occur in the calculation of tax to be remitted. They are therefore committed to making good any PAYE underpayment arising from
- incorrect operation of PAYE
- incorrectly applying a code number
or
- inaccurate grossing up.
If PAYE is over-remitted, the repayment (which is legally repayable to the employee) is usually repaid to the employer by mandate.
Apportionment under Section 690 ITEPA
Where an apportionment under Section 690 (EP8095) is made, any tax gross-up will be after the earnings have been apportioned between UK and non-UK duties.
Cases of doubt or difficulty
Ask the PAYE & NIC Group, PAYE Technical Advice, Shipley, for advice in any case of doubt or difficulty involving tax equalisation. (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
