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HMRC internal manual

PAYE Manual

PAYE operation: international employments: employee sent to UK branch office receives benefits

Arrivals in the UK

Employees or trainees sent to UK branch offices by overseas employers are often provided with

  • Overseas payments of salary, expenses and benefits (company pension and medical plans continue for example, or bonuses and commission are paid)
  • UK payments of salary, expenses and benefits to meet the extra costs of working away from home. (Common examples are housing, school fees for children or a round sum cash expense allowance)

The UK branch must notify HMRC of the income from both sources.

When payments of salary are made, either by the overseas or UK branch, they must be entered on the UK branch’s P11 Deductions Working Sheet / FPS and taxed under PAYE. (This includes any round sum allowances). But payments of salary need not appear on forms P11D, which should show only expenses (excluding any round sum allowances entered on the P11 Deduction Working Sheet / FPS) and benefits in kind, such as company cars or subscriptions to BUPA.

If a form P11D is the first notification you receive that an employee or trainee works at the UK branch you must

  • Take up and remedy any failure to operate PAYE on salary payments or round sum allowances with the UK office
  • Remember that where there has been a PAYE failure the employee or trainee is entitled to credit for the PAYE tax that should have been deducted. See PAYE92066