Section 690 of ITEPA 2003 allows employers to request a determination from HM Revenue and Customs to operate PAYE on a percentage of an employee’s remuneration. This provision benefits internationally mobile employees, mainly non-UK residents who perform duties both in the UK and overseas, together with UK residents claiming Overseas Workday Relief (OWR).
Section 690 allows the amount of income tax withheld via PAYE to be adjusted based on an estimate of the employee’s UK workdays. Such an employee is then required to complete a self-assessment tax return and to report the actual workdays for a tax year.
The determination applies only to income tax, not National Insurance contributions which are chargeable under separate legislative provisions.
Under the old procedure, up until 5 April 2025 employers were required to wait for HMRC to issue a direction to operate PAYE on a proportion of earnings, causing delays as PAYE could not be operated until such direction is received by the employer.
From 6 April 2025, HMRC have changed the process to allow employers to operate adjusted PAYE upon receipt of an automatic acknowledgement from HMRC following submission a notification using HMRC’s online service.
It is worth noting that multi-year applications are no longer possible, therefore fresh notifications must be submitted annually for each eligible employee.
Furthermore, the previously issued directives issued for 2025/26 and beyond are no longer valid, hence new notifications must be submitted to HMRC for each eligible employee.
When submitting a new notification, a consideration must be given to the limitation on OWR applicable from 6 April 2025. The amount of relief that can be claimed going forward will be the lower of 30% of qualifying employment income or £300,000 per tax year, hence in certain cases this may affect future PAYE adjustments.
The new measures may offer some simplification and avoidance of delays. However, it is important to identify any pre-existing directives covering the period from 6 April 2025 and submit new notifications to replace them as soon as possible to ensure PAYE is operated correctly.
At Simmons Gainsford, we are committed to helping you navigate such changes with clarity and confidence. If you have any immediate questions or would like to arrange a call, please contact us today to schedule a complimentary consultation: 01825 746 888 / mail@sgllp.co.uk