Business Tax - 01 Oct 2015
HM Revenue & Customs (HMRC) has announced that where employees coming to the UK from overseas who are taxable on their UK workdays spend no more 30 days a year in the UK, a single annual return can be filed. The change follows a recommendation from the Office of Tax Simplification.
This opportunity, which does not cover directors, is effective immediately. The new rules and application form can be found here.
Previously, where overseas employees who are liable to UK tax on their UK workdays worked in the UK, employers were required to include these workers as part of their usual Real Time Information (RTI) reports and pay the PAYE due in respect of the employee within two weeks of the end of the relevant month.
Under the new arrangement, employers can apply to report the taxable payments in respect of eligible overseas employees annually, with the return due by 19 April following the end of the tax year. Payment of PAYE due in respect of these employees can also be made annually, by 22 April following the end of the tax year. Agreement with HMRC is required to operate the new procedures, and in the absence of agreement incorrect RTI filing and late PAYE payment penalties can be levied by HMRC.
Where the employees are provided with benefits in the UK, these will be reported on the annual return and so also avoiding the requirement to file a Form P11D.
Employers must continue to monitor the number of days spent in the UK by all overseas employees, not least to comply with any Short Term Business Visitor Agreements (covering eligible overseas employees spending up to 183 days in the UK and not liable to UK tax), but overall these new arrangements are a welcome change to an employer’s PAYE obligations.
If the employees covered by these new arrangements do not have any other UK tax liability, HMRC has announced they do not expect the employees to file a Self-Assessment tax return.
The new arrangements cover PAYE only but as they concern overseas employees coming to the UK for short periods of time, in the vast majority of cases liability to National Insurance Contribution (NIC) would not have arisen in respect of these employees due to either the EU Social Security Regulations, UK bilateral totalisation agreements or the operation of the 52 week exemption for non-UK employees. However, if there is a liability to NIC, this must be reported under RTI and paid to HMRC following the month the earnings arose.
Please contact us for further advice and discussion on ways in which we can assist on this or any other employment tax matter.
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