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Income Tax (part 2)

Published 13 August 2026

© Crown copyright 2026

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This publication is available at https://www.gov.uk/government/publications/help-with-short-term-business-visitors-gfc19/income-tax-part-2

Income Tax 

When an employee comes to the UK to work for a short period and remains non‑UK resident for that tax year, only their general earnings that relate to duties performed in the UK will be subject to UK Income Tax. This means you need to consider the place where duties are performed.

Usually, duties are considered to be performed in the place where the employee does the work. However, there are special rules which can apply in certain circumstances to deem employment duties to have been performed either in, or outside, the UK by non-resident workers. These include if:

Where these rules treat employment duties as being performed outside the UK during a tax year for which the employee is not UK resident, any earnings that relate to these duties are not taxable in the UK. Any of their general earnings that relate to UK duties will be taxable when they are received by the employee.

If the employee is UK resident for a tax year, their general earnings for that tax year will be subject to UK tax. This applies no matter where their employment duties during that year are performed.

An employee’s residence for a tax year for UK Income Tax purposes is determined under the Statutory Residence Test (SRT). To determine the Income Tax treatment for employees coming to the UK to work, you will need to consider what their residence for the relevant tax year is likely to be. Read more information in:

If the employee qualifies for split year treatment, any general earnings attributable to the overseas part of the split year will normally only be subject to UK tax if they relate to duties performed in the UK. You can read more about split year treatment in HMRC’s manual at RFIG21000 - Split year treatment.

Double taxation treaties

If an employee working in the UK is resident in a country with which the UK has a double taxation agreement, they may be able to claim relief from UK Income Tax under the relevant treaty article. This is normally done when completing their Self Assessment tax return.

The UK has double taxation treaties with many countries to help make sure that individuals don’t pay Income Tax (in the UK and a country or countries outside of the UK) on the same income more than once.

You should always check the specific treaty, as the wording and allocation of taxing rights can vary between treaties.

The treaty usually sets out how:

  • each country’s taxing rights over employment income are to be determined
  • how double taxation is to be relieved

However, because one country may have the primary taxing right and the other may allow a credit rather than full tax exemption, there can still be a tax liability in both countries.

You can read more about double taxation agreements in International manual INTM150000 - Introduction to double taxation agreements.

If the employee is resident in 2 countries at the same time

In some circumstances an employee can be resident under the domestic legislation of 2 countries for the same period of time. Where there is a double taxation treaty in place between the 2 countries, the employee is treated as being resident in only one of those countries at any particular time for the purposes of applying the terms of the treaty. The treaty will set out how ‘treaty residence’ should be determined. An employee can be ‘treaty non-resident’ for all or part of a tax year. You can read more about this in HMRC’s International manual INTM154000 - Double taxation agreements: residence: contents.

Where an employee is not UK resident, the double taxation treaty will usually state that the UK will not have taxing rights over earnings which relate to the duties performed in the UK during that period. This is provided that certain requirements are met. The requirements are generally:

  • the relevant employee spends less than 183 days in the UK in a 12-month period
  • the employee’s earnings are not paid by, or on behalf of, a UK employer
  • the employee’s earnings are not ultimately borne by, or otherwise properly attributable to a UK permanent establishment

It is important to read the wording of the relevant country’s double taxation agreement carefully, as treaties are not identical. Treaties may also be amended or updated from time to time, so you need to make sure you are referring to the version of the treaty that applies to the relevant period of employment.

Where the UK does not have any taxing right over some or all of an employee’s general earnings for a tax year under a tax treaty, any treaty relief available still has to be claimed. It does not apply automatically.

PAYE (Income Tax) 

You will need to consider the operation of PAYE to payments of taxable earnings made to an employee who:

  • is, or is likely to be, a UK resident for a tax year
  • performs any employment duties in the UK

Even where treaty relief applies and results in no Income Tax being due on an employee’s taxable earnings, you still need to consider if you have any PAYE obligations.

There is a territorial limitation to the scope of PAYE which means that an employer is only required to operate PAYE if they have a UK tax presence. Tax presence for PAYE purposes differs from that for Corporation Tax purposes. The key consideration for PAYE is whether the employer has sufficient presence in the UK to allow for enforcement of any PAYE obligations. For example, a branch or agency in the UK, or a UK representative office, can be sufficient to establish a tax presence for the purposes of PAYE.

If an employer does not have a UK tax presence, then they are not required to operate PAYE. However, they can choose to do so voluntarily. You can read more about this in the PAYE manual at PAYE81610 - PAYE operation: employers ‘presence in UK’.

If an employee works in the UK for an organisation other than their direct employer (the UK entity), and their employer has no UK tax presence and does not operate PAYE, special rules apply. In this situation, the UK entity may be responsible for operating PAYE on the relevant income.

Where an employee enters or leaves the UK to work at the time their earnings are paid, their employer may be unable to determine if the earnings will be subject to UK Income Tax and PAYE. Where an employee will be non-UK resident for a tax year (or part of a tax year) the employer can apply to HMRC requesting that PAYE is only applied to the UK‑taxable portion of an employee’s earnings. If no application has been made, then the employer should operate PAYE on all the employment income. You can read more about telling HMRC that you’ll operate PAYE on a proportion of an employee’s income.

Treaty relief does not prevent an employee’s employment income from being subject to PAYE. However, there are arrangements and processes in place to simplify the operation of PAYE. 

Short-term business visitors — EP appendix 4 arrangement

HMRC can agree that PAYE does not have to be operated by the UK employer on the earnings of certain short-term business visitors.

This is known as an EP appendix 4 arrangement.

The arrangement applies to individuals who meet all of the following conditions:

  1. The employee is a resident in a country that has a double taxation treaty with the UK and the relevant article is applicable to the circumstances.
  2. The employee is coming to work in the UK for a UK company, the UK branch of an overseas company, or is legally employed by a UK resident employer but economically employed by a separate non-resident entity. You can read more information in the ’Economic employer’ section.
  3. The employee’s earnings will not be ultimately borne by a UK employer. However, where the 60-day rule applies then this condition may not necessarily have to be met. You can read more information in the ‘60-day rule’ section.
  4. The employee is expected to stay in the UK for 183 days or less in a specified 12-month period. The relevant treaty will stipulate the exact period (for example, a UK tax year or a rolling 12-month period).

An overseas branch of a UK company is not a separate legal entity (unlike a subsidiary) and is not generally considered resident in the other country. HMRC views an overseas branch as an extension of the main UK entity. This means the UK entity is seen as the employer and employees from an overseas branch cannot be included in an EP appendix 4 arrangement.

There are also some double taxation treaties that have an additional requirement in the ‘Income from employment’ or ‘Dependent personal services’ article that must be met by an employee for them to be included within an EP appendix 4 arrangement. This requirement is that the remuneration is taxable, or subject to tax, in the State of residence according to the laws in force in that State.

It is important that you check the wording in the specific tax treaty that is relevant to your short-term business visitors’ circumstances.

Counting days for the 183-day period

For the purposes of claiming relief from UK tax under a double taxation treaty (such as the 183-day test), a ‘day’ in the UK is defined as a day of physical presence in the UK — at any time during that day, no matter how brief. This includes working days, non-working days such as weekends, annual leave, or sick leave. This is different from the definition of a ‘day’ for the purposes of the Statutory Residence Test.

Example

Maria is sent to work at her Spanish employer’s UK subsidiary in London. She arrives in London on Sunday 20 April. She works Monday to Friday in the UK subsidiary’s office. She decides to spend the weekend sightseeing in London. She boards a plane to Spain on Monday morning, 28 April.

This counts as 9 days for double taxation treaty purposes. The days of arrival and departure are included, as are any weekends or holidays spent in the UK.

Days spent in the UK in transit, as part of a journey between two non-UK locations, are not classed as a ‘day’ in the UK.

It is important to keep track of UK and non-UK workdays in order to apportion UK and non-UK earnings.

You can find more information in the Double Taxation Relief manual DT1921 - Non-residents: short-term visitor exemption 183-day rule.

The 60-day rule

Employees resident in a double taxation agreement country who remain on a non-UK payroll may be treated as employed by a foreign employer where:

  • they are present in the UK for a period of less than 60 days
  • that period does not form part of a more substantial period of presence in the UK

In such cases, treaty relief may apply even where the employee’s remuneration costs are borne by a UK branch or permanent establishment of a foreign employer. This is because it is unlikely that HMRC would view the UK company as being the ‘economic employer’.

Therefore, even if a UK employer bears the cost of the employment, the employee would still meet the conditions to be included in an EP appendix 4 arrangement.

This rule does not apply to employees of an overseas branch of a UK employer.

You can find further information on the 60-day rule (including some examples) in Tax Bulletin – Issue 68 – December 2003 and HMRC’s manuals at PAYE82000 - EP appendix 4: criteria for short-term business visitors.

Economic employer

Where an employee works in the business of a UK entity it is important to determine whether the services provided by the individual is an integral part of that entity. For that purpose, one key consideration is whether that entity obtains the benefits and bears any risks in relation to the work undertaken by the employee. If this is the case, then that entity is likely to be treated as an economic employer. This is even where an individual formally remains an employee of an overseas company.

The other key consideration is whether the UK entity, directly or indirectly, supervises, directs, or controls the manner in which the services are performed.

Whilst recharging of any earnings is a relevant consideration, this should be assessed alongside factors such as:

  • where the duties are carried out
  • who the employee is reporting to
  • who is overseeing the work carried out

 This is not an exhaustive list.

Guidance on the criteria for identifying the economic employer is detailed on the Organisation for Economic Co-operation and Development (OECD) website in paragraphs 8 to 8.28 of the Commentary on Article 15 of the OECD Model Double Taxation Convention.

We have included some of the examples below to show when a company is and is not an economic employer.

Example

Company A, a UK tax-resident company, concludes a contract to provide training to Company B, a French tax-resident company. Company A specialises in training people in the use of computer software and Company B wishes to train its personnel to use recently acquired software. C, an employee of Company A, is sent to Company B’s offices in France to provide training courses to their staff.

In this scenario, C remains an employee of Company A. The services that C provides to Company B are provided on behalf of Company A under the contract concluded between the two companies. Therefore, Company B would not be an economic employer to C.

Example 

Company D, a German tax-resident company, specialises in providing engineering services. Company D employs a number of engineers on a full-time basis. Company E, a smaller engineering company, is tax-resident in the UK and needs the temporary services of an engineer to complete a contract on a construction site in the UK. Company D agrees that one of its German-resident engineers will work for 4 months in the UK on Company E’s contract under the direct supervision and control of one of Company E’s senior engineers. Company E will pay Company D:

  • an amount equal to the remuneration, social security contributions, travel expenses, and other employment benefits of the engineer for the 4-month period
  • a 5 per cent commission

In this case, even though Company D is in the business of providing engineering services, it is clear that the work performed by the engineer on site in the UK is performed on behalf of Company E. The following factors would support the conclusion that the engineer is in an employment relationship with Company E:

  • the engineer’s work is directly supervised and controlled by Company E

  • Company E takes over the responsibility for that work and that it bears the cost of the remuneration of the engineer for the relevant period

You can find further information in the Double Taxation Relief manual DT1922 - Non-residents: UK income: employment.

Applying for an EP appendix 4 arrangement and annual reporting

HMRC’s PAYE manual PAYE82000 – EP appendix 4: criteria for short term business visitors explains:

  • how to apply for an EP appendix 4 arrangement
  • the information you need to report for each employee depending on the days they spend in the UK

You can apply for an EP appendix 4 arrangement through the HMRC Shared Workspace if your organisation is registered to do so. If your organisation is not registered you can register and enrol for the Shared Workspace online service. 

If you cannot use the online service, you can make an application in writing. The application should include an original signature from an individual in a position of authority in the business and sent to:

Charities, Savings & International 3

HM Revenue and Customs

BX9 1AJ

If your application is approved, you are required to submit annual reports to HMRC. These reports are due by 31 May following the end of each tax year. The reporting obligations are split into 4 bands:

  • 1–60 days spent in the UK
  • 61–90 days spent in the UK
  • 91–150 days spent in the UK
  • 151–183 days spent in the UK

The arrangement stipulates that you must have adequate systems to track employees’ movements in and out of the UK. As a minimum, HMRC expects that employees:

  • will periodically report days spent in the UK on business to whoever is controlling the arrangement

  • should not spend more than 30 days intermittently in the UK in any 12-month period without reporting to that central point

The responsibility rests with the UK employer to submit the annual reports to HMRC. The annual report should include an original signature from an individual in a position of authority in the business and can be posted to the same address as the application was sent to. They can also be submitted through a Shared Workspace.

If annual reports are not submitted by the due date, or if the information provided is insufficient, HMRC may cancel the EP appendix 4 arrangement. This would mean that the UK entity will need to operate PAYE to collect Income Tax on earnings of all short-term business visitors.

HMRC no longer requires companies to report non-tax advantaged ERS data for these employees included within an EP appendix 4 agreement if no UK Income Tax and National Insurance contributions would be due. This applies to the current, previous, and future tax years.

You may need to report ERS data in scenarios where UK Income Tax and National Insurance contributions would be due. For example, where the short-term business visitor was previously a UK resident and share options were granted at that time.

ERS reportable events made to individuals covered by an EP appendix 8 arrangement, must still be reported on the ERS end of year return.

You can read more information about ERS reporting in:

No Tax (NT) — PAYE coding notice

If you have only one or two employees who would benefit from an EP appendix 4 arrangement you can consider asking your employees to apply for an NT code on an individual basis instead.

If you are an employee, you need to write to HMRC and request an NT code.

In your request, you should include your:

  • name
  • address
  • date of birth
  • National Insurance number (if you have one)
  • employer’s name
  • employer’s address
  • employer’s PAYE reference

You should also confirm that you meet the following 4 conditions that appear in most double taxation agreements.

  1. You are not resident in the other country for the purposes of the agreement under which the claim is made, for the period of the claim.
  2. You are present in the other country for a period or periods not exceeding, in total, 183 days in any continuous 12-month period.
  3. Your earnings are paid by an employer who is not resident in that other country.
  4. Your earnings are not borne by a permanent establishment or fixed base that the employer has in the other country.

HMRC may request additional information if necessary.

You can read more information in PAYE manual PAYE81625: employee’s earnings paid for by overseas employer: double taxation relief.

Short-term business visitors — EP appendix 8 arrangement

Certain short-term business visitors cannot be included in EP appendix 4 or apply for an NT PAYE code because, for example:

UK employers may be required to operate PAYE to collect Income Tax on these employees’ earnings every pay period. This can create a significant administrative burden, especially in tracking movements and maintaining records for real-time PAYE.

This burden can be reduced under an EP appendix 8 arrangement. EP appendix 8 allows PAYE to be reported and paid through a single annual Real Time Information (RTI) submission following the end of the relevant tax year. An EP appendix 8 arrangement can only apply for employees who:

  • spend no more than 60 workdays in the UK
  • cannot be included under an EP appendix 4 arrangement
  • do not have a National Insurance contributions liability
  • do not receive taxable benefits in kind

The method of counting days differs from that used in the EP appendix 4 arrangement and for the Statutory Residence Test. In general, only days employees actually perform employment duties in the UK count as workdays. You do not need to include incidental workdays or any day where the conditions under EP appendix 4 are met in respect of a whole day. However, where the worker undertakes UK work other than travel on the day of arrival or departure, an overseas workday should be replaced by a half UK workday and a half overseas workday. You can find out more information in the Employment Income manual EIM77020 - General earnings in respect of duties performed in the UK.

Applying for an EP appendix 8 arrangement and annual reporting

You can apply for an EP appendix 8 arrangement by sending an application to:

Charities, Savings & International 3

HM Revenue and Customs

BX9 1AJ

You can find an EP appendix 8 application in PAYE manual PAYE82008 - PAYE special arrangement for short term business visitors – Application Form.

If HMRC approves the application, they will set up an annual PAYE scheme for the employer. The UK employer must report the RTI submissions to HMRC by 31 May following the end of the tax year. In addition:

  • any tax due to HMRC must also be paid by the employer by 31 May
  • if the employee is covered by employer tax equalisation arrangements on all earnings, the tax must be grossed up within the calculation
  • if the employer only bears the tax on the provision of a benefit in kind, the amount of that tax must be grossed up within the calculation 

Even if there are no individuals to report for a particular year, you still need to send a nil return to HMRC by 31 May.

The EP appendix 8 arrangement will continue each year until either HMRC or the employer amends or ends it.

You can read more about the EP appendix 8 arrangement in PAYE manual PAYE81950 - PAYE special arrangement for short term business visitors: Appendix 8. 

Employee obligations

If an employee is included in an employer’s EP appendix 4 or EP appendix 8 arrangement, a Self Assessment tax return does not have to be filed to claim any treaty relief.

However, it is possible that these employees may have other income that means they meet other criteria requiring them to file a Self Assessment tax return. You can read more information about who has to complete a Self Assessment tax return.

However, if PAYE has been operated because there is no EP appendix 4 or 8 arrangement, a non-resident employee working in the UK may be able to claim UK tax relief. This applies if they meet the conditions set out in any double taxation treaty their country of residence has agreed with the UK.

Relief is usually claimed by submitting a UK Self Assessment tax return after the end of the tax year. Any UK Income Tax paid through PAYE may be refunded to the employee.

Non-resident directors

Directors of UK companies who are not UK tax residents cannot be included in an EP appendix 4 or EP appendix 8 arrangement if they carry out UK director duties in the UK.

HMRC would not normally consider a non-resident director of a UK company performing UK duties to be ‘merely incidental’.  For example, attending an in-person board meeting in the UK as a director of a UK company would not be considered ‘merely incidental’ duties.

This means any UK earnings from directors’ duties of a UK company performed by a non-resident director will generally be liable to Income Tax in the UK which is accounted for through PAYE by the UK employer.

Company directors hold an office and are considered to be employed earners for National Insurance contributions purposes. This may lead to UK social security legislation applying to a director under the terms of some of the UK’s agreements with other countries, especially those with the EU, even when the person spends most of their time outside of the UK. This is typically the case where the director is considered self-employed under the social security legislation of the other country. It is important to determine whether a company director is considered employed or self-employed under the social security legislation of the other country. This is vital to correctly apply any social agreement between that other country and the UK to determine which country’s social security legislation they are subject to and in which country their liability to social security contributions arises.

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