How to calculate and deduct PAYE for employees coming to work in the UK 22 October 2020
Employers can apply to operate PAYE on employee earnings for work they carry out in the UK in scenarios where an employee is not a UK resident and works both within and outside of the UK, or where the employee is a resident in the UK, the remittance basis applies to them and they meet the three year period of non-residence. Employers must apply to HMRC for a s690 Direction, under which HMRC will give the employer formal permission to exclude a portion of the employee’s pay from the operation of UK PAYE – see https://www.gov.uk/government/publications/paye-apply-for-a- section-690-or-informal-treaty-direction-s690.
Examples
A UK company maintains a branch overseas. A senior executive from that branch visits the UK on business for three months of the tax year without forming UK tax residency. Although deemed non UK resident, as the executive is ultimately employed by the UK company UK tax is due for days of work performed here. HMRC will issue on request a s690 Direction directing the employer to only subject 25% of the executive’s salary to UK tax. A global group of companies sends a senior executive of non UK domicile on a three year assignment to the UK. Although the work will be performed predominantly in the UK, the executive will visit Paris, Berlin and Amsterdam every month on business amounting to 10% of the employee’s working time. This employee will be deemed to be UK tax resident, but as a non UK domiciled individual, who has NOT been a UK tax resident in the three years prior to arrival, the employee may claim Overseas Workday Relief. Provided the portion of salary for the business trips abroad is paid to a foreign bank account and is not bought to the UK (which thus qualifies it for taxation under the remittance basis) it will be exempt from UK taxation. HMRC will issue on request a s690Direction directing the employer to ignore the 10% of salary earned and remitted overseas during the tax year of arrival in the UK, and for the two subsequent tax years. Any employer who currently holds a s690 Direction, and because of the disruption caused by the virus believes the original Direction is now inaccurate, should apply to HMRC to either withdraw or amend the s690 Direction issued for affected employees.
With thanks to Tim Kelsey, of Kelsey’s Payroll Services, who provided this article.
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NICs settlement returns – NSR Appendix 7A and 7B – deadline extension 24 March 2021
HMRC has confirmed that the deadline for submitting forms NSR Appendix 7A and NSR Appendix 7B has been extended due to the ongoing impacts of coronavirus.
Businesses that have an agreement in place to operate Class 1 National Insurance contributions NICs under Employment Procedures appendix 6 should print and complete form NSR Appendix 7A.
Form NSR Appendix 7B should be used for employees who are working abroad, where their employer has an agreement to operate Class 1 NICs under the same rules.
The deadline for both forms for tax year 2019-20 has been extended from 31 March 2021 to 30 June 2021.
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Update to CWG2 26 March 2021
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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