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HMRC internal manual

PAYE Manual

Employer records: maintain employer record: linked schemes

What is a linked scheme?

A linked scheme is an employer record that has a connection with another employer record.

A scheme can be connected or linked to another scheme for a number of reasons.

Subsidiary schemes

An employer record is set up where a separate company is created to deal with a particular area of work, or to specialise. For example, ‘ABC Financial Services Ltd’ a subsidiary of ‘ABC Ltd’. In this case the new employer’s linked scheme would be the parent company and vice-versa.

Group of companies

An employer record would have a linked scheme where it is part of the same group of companies. This may not have the same name included in the title but the connection could be that the same person or organisation owns it. This can be referred to as its ‘sister company’.

Third party paying sick pay

This is a scheme where a third party is responsible for making payments to the employees of a particular company or companies on behalf of that company. In this case the linked scheme would be the company for whom the sick scheme is making payments to its employees. An example of this is an insurance company.

Taxed award schemes

All employer records with this scheme type are held by one office (HMRC Incentive Award Unit). This scheme type is used when providers of incentive awards have entered into a special accounting arrangement for paying the basic rate tax liability on non-cash awards made to their own (or someone else’s) employees. In this type of case the provider’s linked scheme would be the employer for whom its employees are receiving the non-cash awards.