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HMRC internal manual

PAYE Manual

PAYE operation: international employments: modified arrangements for internationally mobile employees

Modified PAYE arrangements for internationally mobile employees

The PAYE special arrangement for short term business visitors at PAYE81950 and the Appendix 4, 5, 6, 7A and 7B agreements that are summerised in the Appendices at the end of this section in the PAYE manual, allow employers of internationally mobile employees to operate a modified form of PAYE.  These employers can report details to HMRC in a different way or at a different time to what is normally required under the PAYE legislation.

There are links in this summary to further guidance on the specific agreement.

PAYE Special arrangement for Short Term Business Visitors

The arrangement has been agreed under Regulation 141 of the income Tax (PAYE) Regulations 2003.

Who is the agreement for?

UK Employers who operate internationally and in countries that may not be covered by a Double Taxation Treaty with the UK or who have branches overseas.  These employers can have an obligation to operate PAYE on non-resident employees who come to the UK to work for them from overseas group companies or branches, but only for a short period of time.  There can be significant employer burden in monitoring employee movements and operating PAYE on small amounts of taxable income.  Many of these employees are eligible for personal allowances and there is ultimately no UK liablility.

There is further guidance and a copy of this agreement at PAYE81950.

EP Appendix 4

Appendix 4 applies to individuals who are

  • Resident in a country which the UK has a Double Taxation Agreement under which the Dependent Personal Services / Income from Employment Article applies
  • Coming to work in the UK for a UK company or the UK branch of an overseas company, or are
  • Legally employed by a UK resident employer, but economically employed by a separate non-resident entity
  • Expected to stay in the UK for 183 days or less in any twelve month period

You can find guidance on this agreement at PAYE82000

EP Appendix 5

Appendix 5 applies to employers who are required to deduct foreign tax in addition to UK PAYE from payments being made to employees sent to work abroad.  Its aim is to give provisional relief for double taxation to employees who must pay both UK tax and foreign tax from the same payments of earnings.  You can find guidance on ths agreement at PAYE82001

EP Appendix 6

Appendix 6 can be used for employees assigned to work in the UK from abroad who are tax equalised.  Tax equalisation is usually an arrangement between an employer and a foreign national employee who comes to the United Kingdom to work.  The employee will usually be entitled to a specified amount of net earnings and benefits and the employer agrees to meet their UK Tax liability.  You can find guidance on this agreement at PAYE82002

EP Appendix 7A

Appendix 7A is for employees subject to an EP Appendix 6 agreement, who are assigned to work in the UK from abroad and have an employer or host employer in the UK liable for secondary UK National Insurance (NICs).  The employee pays NICs on earnings in this employment above the annual upper earnings limit (UEL) for the year or on earnings at or above the UEL in each earnings period throughout the year.  You can find guidance on this agreement at PAYE82003

EP Appendix 7B

Appendix 7B applies to employees employed by a UK employer who are assigned to work abroad for a period of limited duration, but for more than a complete tax year, who have an ongoing liability to UK NICs whilst abroad.

The employee will be paid above the upper earnings limit (UEL) in every earnings period throughout the tax year and will receive some earnings and benefits derived from the employment from sources other than the UK employer.

The employee will not be liable to UK tax on the earnings from employment.

You can find further information on this agreement at PAYE82004