Apply to operate foreign tax credit relief
Find out how to apply for authority to give an employee foreign tax credit relief if you're a UK employer and you send an employee to work abroad.
Before you apply, you should check if your employee can claim foreign tax credit relief.
You must still report PAYE (Pay As You Earn) and National Insurance contributions for the employee while they’re abroad.
To apply for authority to give an employee foreign tax credit, you need to send a letter to the following address:
HMRC
Queensway House
Stewartfield Way Peel Park
East Kilbride
United Kingdom
G79 1AA
What you’ll need
You will need to give the following details in your application letter:
- the country the employee is going to work in (including if the work is carried out offshore on the UK Continental Shelf)
- confirmation that you are required to withhold foreign taxes from your employee’s earnings
- confirmation that your software is compatible and can report Net of Foreign Tax Credits on your Full Payment Submission (FPS) — you can also give the name of the software provider
- name and National Insurance numbers of the employee going abroad
- confirmation the tax year the application is for, as we cannot accept applications for a previous or closed tax year
After you’ve applied
You will receive a letter from HMRC to confirm if the application for an Appendix 5 arrangement has been accepted.
Once the application has been accepted, you must:
- offset any foreign tax deducted against UK tax due under PAYE when you pay your employee
- provide updates to HMRC every 3 months about the status of your employees
- continue to report PAYE while the employee is abroad
- continue to deduct National Insurance contributions as normal
- deduct any additional UK tax due
Providing updates to HMRC
Every 3 months you should contact HMRC to report details of your employees. If no employee details have changed you still need to tell HMRC.
To do this, you should send a letter to the following address:
Appendix 5 Team
PAYE and Self Assessment
HM Revenue and Customs
BX9 1AS
You should include in your update letter:
- your name and contact details
- the name of your business
- the names and National Insurance numbers of the employees who claim foreign tax credit relief
- details of any employees that have left the company
- details of any employees that no longer work abroad
- details of any new employees working in a country where you have a foreign tax relief agreement
- confirmation that no employee details have changed, if applicable
If you do not update HMRC every 3 months, your employee’s records may not be accurate and they may get:
- amended tax codes
- calculations that show incorrect underpayments
You must report foreign tax credit relief at the end of each tax year.