Employment Income Manual

EIM43535 - Globally mobile employees: PAYE: notification to only operate PAYE on a proportion of income

From 6 April 2025, where an employee works or is likely to work both in and outside the UK during a tax year and  

• the employee is, or is likely to be, non-resident for that tax year
• the tax year is, or is likely to be, a split year as respects the employee, or
• the employee is, or is likely to be, a qualifying new resident for that tax year

some, or all, of their employment income which relates to duties performed outside the UK may not be chargeable to UK income tax, or the employee may be able to claim relief on this income under the Overseas Workday Relief regime (see EIM43555+).

An employee’s residence for a tax year is determined under the statutory residence test (see RFIG20000).

In these circumstances, sections 690A & 690D ITEPA 2003 allow an employer to notify HMRC of their intention to treat a proportion of certain payments to the employee as not being PAYE income (see PAYE81519).

When an employee is, or is likely to be, treaty non-resident for a tax year and works wholly or partly outside the UK, their employer, or a person designated by their employer can similarly notify HMRC of their intention to treat a proportion of certain payments to the employee as not being PAYE income (see PAYE81518).

Where a valid notification is made, it has effect from the date that HMRC acknowledge receipt of the notification and allows the employer to operate PAYE on the proportion of any eligible payment which is expected to relate to UK duties (see PAYE81522).

This notification does not affect the employee’s underlying liability to income tax on their employment income, so that where such a notification is made for a tax year, the employee will need to file a Self-Assessment tax return for that tax year.