Non-resident employers and liability to PAYE in the UK

Produced by Tolley in association with

Employment Tax

Guidance

STOP PRESS: At Spring Budget 2024, the Chancellor announced that the remittance basis would be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.

Introduction

In some situations, an employee of a non-UK employer may be subject to UK Pay As You Earn (PAYE) tax and / or national insurance contributions (NIC) withholding while they spend time working in the UK. Simply having a non-UK contractual employer does not automatically mean that PAYE does not need to be operated.

Liability to withhold UK income tax

UK-based businesses are legally bound to pay their UK employees via PAYE if any of their employees earn more than the lower earnings limit (LEL) (see the Overview of NIC Classes, rates and thresholds guidance note for rates), if the employee

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Gill Salmons

Director at Global Eyes Tax Services Limited

I am a member of both the CIOT and ATT and have over 15 years' experience of working with expatriate populations, working inside and outside the Big 4 but mainly in the mid-tier. My clients have included household names as well as much smaller businesses, with expatriate populations as small as 1 or as large as 650+. Each size of business has its own challenges, which is what makes this work interesting; the cultural aspect to working with individuals from around the world cannot be overlooked! I have experience in general employment tax work, including elements of UK and international payroll as well as expatriate tax issues, and have also spent considerable amounts of time dealing with National Insurance matters for inbound and outbound assignees.

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