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HMRC internal manual

PAYE Manual

PAYE operation: international employments: action when employee returns to UK early

Departures from the UK

There are many reasons why work abroad may be cut short. The employee may terminate the contract for personal reasons or the employer may end the contract if the employee is needed for other work. There may be changes to overseas conditions or the client may end the contract early.

It is not unusual for the employer to meet the employee’s tax liability if an underpayment arises in such circumstances. Where this happens and the employee’s liability is met by the employer, it is additional earnings from the employment. Such additional earnings must be returned on form P9D or P11D.

You may also find that the employer undertakes to pay the tax on these additional earnings. If this happens, you should:

  • Gross up the underpayment arising from the incorrect operation of code NT. Do this using the correct code that should have been operated whilst the employee was abroad.
  • Tell the employer to

    • Return the extra earnings on form P9D or P11D
    • Return the grossed up tax on an additional form P35 / Final Payment Summary (FPS)
    • Submit forms P14 / FPS showing the grossed up additional earnings and additional tax

Note: 2015-16 is the last tax year the P9D can be used.