By prior agreement with HMRC an employer may operate a Modified
PAYE arrangement for its "tax equalised" employees (see Appendix 6
of the Employment Procedures Manual which is available on the HMRC
internet site). Should such an arrangement apply then relief under
the migrant member relief or transitional corresponding relief
provisions for employer and employee contributions can be given in
the PAYE calculation.
Under Modified PAYE the employer makes an estimated PAYE tax
calculation for its "tax equalised" employees at the beginning of
the tax year and, subject to review, pays PAYE tax on that basis
during the year. The employer should exclude from the estimated
PAYE calculation the contributions it will make on behalf of those
employees to overseas pension schemes to which the migrant member
relief or transitional corresponding relief provisions apply. The
employer may also exclude an amount for employees’ own
contributions. This is on the understanding that the employer or
advisers engaged by the employer will prepare the relevant tax
returns of its “tax equalised” employees in accordance
with IR212.
| Glossary ( RPSM20000000) |
