EP Appendix 5

25 March 2014

HMRC has been advised that some software developers have been unable to update their products for EP Appendix 5 but are looking to do so before 6 April 2015.

HMRC has therefore decided to extend the period during which employers may operate EP Appendix 5 without compliant software until 6 April 2015. This is a final extension. From 6 April 2015, EP Appendix 5 will only be available where the employer is able to report UK tax paid after the foreign tax credit relief has been deducted in the data items Total Tax to Date and Tax Deducted or Refunded.

Some employers know that their current software will not be updated in 2014-15 and do not intend to change their provider. Those employers may have already made arrangements for employees to apply for tax codes with estimated double taxation relief from 6 April 2014. These employers are encouraged to apply the new tax codes and not revert back to EP Appendix 5 for 2014-15.

All employers who use EP Appendix 5 will be contacted within the next few weeks.

Q48 of the expatriate frequently asked questions will be amended in April to include this information.

Q48 currently states the following:

Q48. My payroll software does not allow me to reduce the tax due by the FTCR. How do I report the FTCR applied under EP Appendix 5?

A.  HMRC has been talking to software developers and it appears that certain payroll software can accommodate the payroll adjustments Appendix 5 employers need to make in respect of foreign tax paid. Employers experiencing problems are advised to contact their payroll provider in the first instance. If workarounds currently exist then payroll providers will advise employers as necessary. Employers should try to resolve any reporting problems they have during the current year. If employers have been unable to do so they must submit an EYU after 6 April 2014 to correct their own employer charge and the pay and tax details of their seconded employees. Employers who are still having problems reporting RTI correctly for their seconded employees will not be able to operate Appendix 5 processes for tax years 2014-15 onwards. Employees will however be able to request an estimate of the foreign tax credit relief be included in their tax codes.