How to calculate and deduct PAYE for employees coming to work in the UK

21 October 2020

HMRC has updated guidance on the topic of employees coming to work in the UK from abroad, and advises employers about how to apply for an agreement to operate PAYE on an employee’s earnings for UK work.

Employers can apply to operate PAYE on employee earnings for work they carry out in the UK in scenarios where an employee is not a UK resident and works both within and outside of the UK, or where the employee is a resident in the UK, the remittance basis applies to them and they meet the three year period of non-residence.

In circumstances where HMRC confirms that an employer can operate PAYE in this way, it can be applied to all payments made to the relevant employees, and this includes termination payments and shared-based remuneration.

Where an agreement is already in place, but it has not been possible for an employee to either leave or return to the UK, due to measures implemented to reduce the spread of coronavirus, employers can contact HMRC to ask them to amend the arrangement.

This will mean that, if the employee has been unable to leave the UK in tax year 2020-21, then PAYE can be operated on 100% of their earnings, and similarly, if they are unable to return to the UK indefinitely, UK tax could be reduced accordingly, or may not even be due, depending on the employee’s individual circumstances.

In order to request an amendment to an agreement, the routes below should be followed:


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