EP8095 - International employments: Part 1: arrivals in UK: UK employer's duties
The following guidance tells you what the employer should do and describes any action you need to take. The CWG2, Employer Further Guide to PAYE and NICs also gives advice to employers who have to operate PAYE where employees are paid abroad by another employer.
The employee returns to the UK after a period of duty abroad for a UK employer
When the employee returns, there should already be a live record at the employer reference. Although the employer does not need to send the office either a form P45 or P46, the employer should always tell you that the employee has returned. This is so that you can review the NT code (see EP8111) and payroll arrangements can be altered if necessary.
The employee comes to work for a UK employer but continues to receive wages and benefits from the overseas employer or from another connected overseas concern (see EP8085)
The UK employer must take the following action
- Send in a completed P46 or P46(Expat)
- Make arrangements with the overseas payer to receive information on the payments made to the employee
- Operate PAYE on the remuneration and other payments
The employee is resident/not ordinarily resident or not resident in the UK and works both in and outside the UK
The employer can apply under Section 690 ITEPA 2003 for a
direction from HMRC that they operate PAYE on only the percentage
of the employee’s total earnings that are for work in the UK.
This applies to all payments made by the employer including
termination payments and share based remuneration.
The Section 690 application is only an estimate of the work
done in and outside the UK and the employee should complete a SA
return to report the actual position. See
EP8097- EP8099 on how to handle
applications under Section 690 ITEPA 2003.
If an employer does not make an application under Section
690 ITEPA 2003, then unless the employee is within an Appendix 6
arrangement (see
EP8251 and
EP8252), they must operate PAYE on all
payments made to the employee for work done both in and outside the
UK. The employee can claim a repayment of the tax deducted on
earnings for work done outside the UK on their SA Return.
You must set up a SA record for an employee where work is
performed both in and outside the UK, whether or not a Section 690
application is made.
If the employer provides Tax Equalisation arrangements for
the employees you should refer to
EP8250.
Cases of doubt or difficulty should be referred to PSN, PAYE
Technical, Shipley for advice.
The new arrival has claimed Jobseeker’s Allowance
A new arrival may have been entitled to Jobseeker’s
Allowance between the date of arrival and date of starting work in
the UK. The employee may have a P45U to give to the employer when
starting the first job.
If so, the employer must
- Send form P45U to HMRC
And
- Operate the tax code specified for emergency use until you send a revised tax code
You should send the new arrival a form P91 to complete.
The employee receives cash benefits from the employer
If the employer pays cash benefits, such as reimbursed rent or
school fees in cash to the employee, in addition to salary, they
must be included with pay on the Deductions Working Sheet.
If cash benefits have been included in gross pay on
Deductions Working Sheets (forms P11) and End of Year documents
(forms P14)
- Do not code them out
- The employer need not return them on form P11D
Alternatively, if the employer meets the employee’s pecuniary liability and makes the payment directly to the third party, PAYE cannot be operated. Instead the items should be reported on forms P11D or P9D as appropriate.
Short term business visitors
Refer to the guidance at EP8127.
All other cases
The UK employer must
- Send a completed form P46 or P46(Expat) as soon as the UK work starts.
And
- Deduct tax from all remuneration using the emergency code and account for NICs if appropriate
