Law

Income Tax (Earnings and Pensions) Act 2003

United Kingdom · statute

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In force since 2026-07-15, as the publisher states.

Copy read on 2026-11-08. The page it was read from

Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.

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Contents: 1,080 provisions

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1,080 provisions

680 Person liable for tax

The person liable for any tax charged under this Part on a benefit to which section 678 applies is the person receiving or entitled to the benefit.

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681 Taxable and other foreign benefits: exemptions

(1) No liability to income tax arises on a taxable foreign benefit if, or to the extent that, the corresponding UK benefit is exempt income. (2) No liability to income tax arises on a benefit which is payable under the law of a country or territory outside the United Kingdom if it is substantially similar in character to a United Kingdom social security benefit listed in Table B. (3) In this section— “taxable foreign benefit” means a benefit to which section 678 applies; “corresponding UK benefit”, in relation to a taxable foreign benefit, means the taxable benefit listed in Table A to which the foreign benefit is substantially similar in character (see section 678).

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681A Foreign benefits of consular employees

(1) No liability to income tax arises in respect of any benefit to which section 678 applies of a consular officer or employee in the United Kingdom for a foreign state if— (a) Her Majesty by Order in Council directs that this section applies to the foreign state for the purpose of giving effect to a reciprocal arrangement with that state, and (b) the officer or employee meets conditions A to C. (2) Condition A is that the officer or employee is not— (a) a British citizen, (b) a British overseas territories citizen, (c) a British National (Overseas), or (d) a British Overseas citizen. (3) Condition B is that the officer or employee is not engaged in any trade, profession, vocation or employment in the United Kingdom, otherwise than as a consular officer or employee of the state in question. (4) Condition C is that— (a) the officer or employee is a permanent employee of that state, or (b) the officer or employee was non-UK resident for each of the 2 tax years preceding the tax year in which the officer or employee became a consular officer or employee in the United Kingdom of that state. (5) In this section— “consular officer or employee” includes any person employed for the purposes of the official business of a consular officer at— any consulate, any consular establishment, or any other premises used for those purposes, and “reciprocal agreement” has the same meaning as in section 302. (6) Section 302(5) to (7) apply to an Order under subsection (1) and the operation of this section as they apply to an Order under section 302(1) and the operation of section 302.

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681B High income child benefit charge

(1) A person (“P”) is liable to a charge to income tax for a tax year if— (a) P's adjusted net income for the year exceeds £60,000, and (b) one or both of conditions A and B are met. (2) The charge is to be known as a “high income child benefit charge”. (3) Condition A is that— (a) P is entitled to an amount in respect of child benefit for a week in the tax year, and (b) there is no other person who is a partner of P throughout the week and has an adjusted net income for the year which exceeds that of P. (4) Condition B is that— (a) a person (“Q”) other than P is entitled to an amount in respect of child benefit for a week in the tax year, (b) Q is a partner of P throughout the week, and (c) P has an adjusted net income for the year which exceeds that of Q.

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681C The amount of the charge

(1) The amount of the high income child benefit charge to which a person (“P”) is liable for a tax year is the appropriate percentage of the total of— (a) any amounts in relation to which condition A is met, and (b) any amounts in relation to which condition B is met. For conditions A and B, see section 681B. (2) “The appropriate percentage” is— (a) 100%, or (b) if less, the percentage determined by the formula— ANI – L X % Where— ANI is P's adjusted net income for the tax year; L is £60,000; X is £200. (3) If— (a) the total of the amounts mentioned in paragraphs (a) and (b) of subsection (1), or the amount of the charge determined under that subsection, is not a whole number of pounds, or (b) the percentage determined under subsection (2)(b) is not a whole number, it is to be rounded down to the nearest whole number.

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681D Extension of charge in cases where child not living with claimant

(1) This section applies where— (a) a person (“R”) is entitled to an amount in respect of child benefit for a child for a week in a tax year by virtue of section 143(1)(b) of SSCBA 1992 or section 139(1)(b) of SSCB(NI)A 1992 (persons contributing to the cost of providing for a child), (b) neither R, nor any person who is a partner of R throughout that week, is liable for a charge to income tax in respect of that amount under section 681B, and (c) there is another person (“S”) who, for the purposes of section 143(1)(a) of SSCBA 1992 or section 139(1)(a) of SSCB(NI)A 1992 (persons with whom child is living), is a person who has the child living with him or her in that week. (2) Section 681B applies as if S were entitled to the amount of child benefit mentioned in subsection (1)(a). (3) Where there is more than one person to whom subsection (1)(c) applies in relation to an amount of child benefit for a week, subsection (2) applies only to the one with the highest adjusted net income for the tax year. (4) For the purposes of subsection (1)(a), an amount of child benefit to which R is entitled for a week is to be ignored if— (a) the period (which includes that week) for which R is entitled to child benefit by virtue of section 143(1)(b) of SSCBA 1992 or section 139(1)(b) of SSCB(NI)A 1992 in respect of the same child does not exceed 52 weeks, and (b) R is entitled to child benefit in respect of the child for the week immediately before and the week immediately after that period by virtue of section 143(1)(a) of SSCBA 1992 or section 139(1)(a) of SSCB(NI)A 1992. (5) In this section “child” means— (a) a child within the meaning of section 142 of SSCBA 1992 or section 138 of SSCB(NI)A 1992, or (b) a qualifying young person within the meaning of either of those sections.

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681E Special cases

(1) The following amounts are to be disregarded for the purposes of this Chapter— (a) amounts to which a person is entitled but in respect of which an election under section 13A of the Social Security Administration Act 1992 or section 11A of the Social Security Administration (Northern Ireland) Act 1992 (election for payment of child benefit not to be made if high income child benefit charge would be triggered) has effect; (b) amounts to which a person is entitled by virtue of section 145A of SSCBA 1992 or section 141A of SSCB(NI)A 1992 (entitlement to child benefit after death of child or qualifying young person). (2) Subsection (3) applies if— (a) a person (“T”) is entitled to an amount in respect of child benefit for a week in a tax year or is treated as so entitled by virtue of section 681D(2), (b) two or more other persons are partners of T throughout the week, and (c) two or more of those persons would, apart from subsection (3), each be liable to a charge under section 681B(1) in relation to that amount. (3) Only one of those persons is liable, namely the person with the highest adjusted net income for the tax year.

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681F Alteration of income limit etc by Treasury order

(1) The Treasury may by order— (a) substitute another amount for the amount for the time being specified in section 681B(1)(a) and defined as “L” in section 681C(2), or (b) substitute another amount for the amount defined as “X” in section 681C(2). (2) An order under this section has effect for tax years beginning after the order is made. (3) A statutory instrument containing an order under this section which increases any person's liability to income tax may not be made unless a draft of it has been laid before and approved by a resolution of the House of Commons.

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681G Meaning of “partner”

(1) For the purposes of this Chapter a person is a “partner” of another person at any time if either condition A or condition B is met at that time. (2) Condition A is that the persons are married to, or civil partners of, each other and are neither— (a) separated under a court order, nor (b) separated in circumstances in which the separation is likely to be permanent. (3) Condition B is that the persons are not married to, or civil partners of, each other but are living together as if they were a married couple or civil partners. (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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681H Other interpretation provisions

(1) This section applies for the purposes of this Chapter. (2) “Adjusted net income” of a person for a tax year means the person's adjusted net income for that tax year as determined under section 58 of ITA 2007. (3) “Week” means a period of 7 days beginning with a Monday; and a week is in a tax year if (and only if) the Monday with which it begins is in the tax year.

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681I Winter fuel payment charge

(1) A person (“P”) is liable to a charge to income tax for a tax year if— (a) P is entitled to a winter fuel payment in respect of the qualifying week, and (b) P’s total income for the tax year exceeds £35,000. (2) The charge is to be known as the “winter fuel payment charge”. (3) The amount of the charge is equal to the amount of the winter fuel payment. (4) But P is not liable for the charge if P is entitled to a relevant benefit on any day in the qualifying week. (5) The following are “relevant benefits”— (a) income support under section 124 of SSCBA 1992 or section 123 of SSCB(NI)A 1992; (b) an income-based jobseeker’s allowance under section 1 of JSA 1995 or Article 3 of JS(NI)O 1995; (c) state pension credit under section 1 of SPCA 2002 or section 1 of SPCA(NI) 2002; (d) an income-related employment and support allowance under section 1(2)(b) of WRA 2007 or Part 1 of the Welfare Reform Act (Northern Ireland) 2007; (e) universal credit under Part 1 of WRA 2012 or Part 2 of the Welfare Reform (Northern Ireland) Order 2015. (6) In this section— (a) a “winter fuel payment” means a payment under the Social Fund Winter Fuel Payment Regulations 2025, the Winter Heating Assistance (Pension Age) (Scotland) Regulations 2024 or the Social Fund Winter Fuel Payment Regulations (Northern Ireland) 2025; (b) the “qualifying week”, in relation to a tax year, means the week beginning on the third Monday in the September of that tax year.

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681J Alteration of income limit by Treasury order

(1) The Treasury may by order substitute another amount for the amount for the time being specified in section 681I(1)(b). (2) An order under this section has effect for tax years beginning after the order is made. (3) A statutory instrument containing an order under this section which increases any person's liability to income tax may not be made unless a draft of it has been laid before and approved by a resolution of the House of Commons.

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682 Scope of this Part

(1) This Part provides for the assessment, collection and recovery of income tax in respect of PAYE income and includes provision in respect of the deduction of certain other amounts from, and the repayment of certain other amounts with, PAYE income. (2) The provisions of this Part are contained in— this Chapter (which gives the meaning of “PAYE income”), Chapter 2 (PAYE: general), Chapter 3 (PAYE: special types of payer or payee), Chapter 4 (PAYE: special types of income), Chapter 5 (PAYE settlement agreements), and Chapter 6 (miscellaneous and supplemental). (3) Provision for PAYE regulations is made by Chapters 2 to 6.

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683 PAYE income

(1) For the purposes of this Act and any other enactment (whenever passed) “PAYE income” for a tax year consists of— (a) any PAYE employment income for the year, (b) any PAYE pension income for the year, and (c) any PAYE social security income for the year. (2) “PAYE employment income” for a tax year means income which consists of— (a) any taxable earnings from an employment in the year (determined in accordance with section 10(2)), and (b) any taxable specific income from an employment for the year (determined in accordance with section 10(3)). (3) “PAYE pension income” for a tax year means, subject to subsections (3A) to (3D), taxable pension income for the year determined in accordance with any of the following provisions— section 571 (United Kingdom pensions), section 578 (United Kingdom social security pensions), section 579B (pension under registered pension scheme), section 612, so far as relating to annuities to which section 610 applies (annuities under non-registered occupational pension schemes), section 616 (certain overseas government pensions paid in the United Kingdom), section 621 (the House of Commons Members' Fund), section 634 (voluntary annual payments). section 637B (tax treatment of pension commencement excess lump sums), section 637G (tax treatment of trivial commutation lump sums and winding-up lump sums), section 637N (trivial commutation lump sum death benefits). (3ZA) PAYE employment income” for a tax year does not include any taxable specific income treated as paid or received in that tax year by section 394A or 554Z4A (temporary non-residents). (3A) “PAYE pension income” for a tax year also includes any social security pension lump sum (within the meaning of section 7 of F(No.2)A 2005) in respect of which a charge to income tax arises under that section for that tax year. (3B) PAYE pension income” for a tax year does not include any taxable pension income that is treated as accruing in that tax year by section 572A or 579CA (temporary non-residents) or section 579CB (inheritance tax overpaid by scheme administrator: refund treated as pension). (3C) PAYE pension income” for a tax year does not include any taxable pension income that is treated as accruing in that tax year by virtue of Chapter 15A of Part 9 (pension income: lump sums under registered pension schemes) so far as having effect as applied by paragraph 1(3)(e) of Schedule 34 to FA 2004. (3D) “PAYE pension income” for a tax year does not include any amount to which section 579A applies by virtue of any of the following provisions— section 637H(2) (certain defined benefits lump sum death benefits), section 637I(2) (certain pension protection lump sum death benefits), section 637J(2) (certain uncrystallised funds lump sum death benefits), section 637K(2) (certain annuity protection lump sum death benefits), section 637L(2) (certain drawdown pension fund lump sum death benefits), section 637M(2) (certain flexi-access drawdown lump sum death benefits). (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) “PAYE social security income” for a tax year means taxable social security income for the year determined in accordance with section 658(4) or (5) (taxable United Kingdom social security benefits).

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684 PAYE regulations

(1) The Commissioners ... must make regulations (“PAYE regulations”) with respect to the assessment, charge, collection and recovery of income tax in respect of all PAYE income. (2) The provision that may be made in PAYE regulations includes any such provision as is set out in the following list. List of Provisions Provision— for requiring persons making payments of, or on account of, PAYE income to make, at the relevant time, deductions or repayments of income tax calculated by reference to tax tables prepared by the Commissioners ..., and for making persons who are required to make any such deductions or repayments accountable to or, as the case may be, entitled to repayment from the Board. “The relevant time” is— if the payment is a notional payment for the purposes of section 710 and the person is treated by virtue of any Act as making it at a time before the date on which the Act is passed, that date, and in any other case, the time when the payment is made. Provision— for authorising a person (“P”), in a case where the PAYE income of an employee (whether an employee of P or of another person) includes an amount charged to tax under any of Chapters 3 to 10 of Part 3 in respect of the provision of a benefit of a specified kind— to make deductions of income tax in respect of the benefit from any payment or payments actually made of, or on account of, PAYE income of the employee, or to make repayments of such income tax, for any such deductions or repayments to be made at a specified time, for the amount of any such deductions or repayments to be calculated in accordance with the regulations, for the provision of the benefit to be treated for specified purposes as a payment of PAYE income, and for making persons who make any such deductions or repayments accountable to or, as the case may be, entitled to repayment from the Commissioners. Provision— for deductions to be made, if and to the extent that the payee does not object, with a view to securing that income tax payable in respect of any income of a payee for a tax year which is not PAYE income is deducted from PAYE income of the payee paid during that year; and as to the circumstances and manner in which a payee may object to the making of deductions. Provision— for repayments or deductions to be made, if and to the extent that the payee does not object, in respect of any amounts overpaid or (or treated as overpaid) on account of, or any amounts other than relevant debts remaining unpaid (or treated as remaining unpaid) on account of— income tax in respect of income for a previous tax year, or capital gains tax in respect of chargeable gains for such a year; and as to the circumstances in which repayments or deductions may be made, and the circumstances and manner in which a payee may object to the making of repayments or deductions. Provision— for deductions to be made, if and to the extent that the payee does not object, with a view to securing that income tax payable for a tax year by the payee by virtue of section 681B (high income child benefit charge) is deducted from PAYE income of the payee paid during that year, for repayments to be made in a tax year, if and to the extent that the payee does not object, in respect of any amounts overpaid on account of income tax under that section for that tax year, and as to the circumstances and manner in which a payee may object to the making of deductions or repayments. Provision— for deductions to be made, if and to the extent that the payee does not object, with a view to securing that income tax payable for a tax year by the payee by virtue of section 681I (winter fuel payment charge) is deducted from PAYE income of the payee paid during that year, for repayments to be made in a tax year, if and to the extent that the payee does not object, in respect of any amounts overpaid on account of income tax under that section for that tax year, and as to the circumstances and manner in which a payee may object to the making of deductions or repayments. Provision— for deductions to be made in respect of relevant debts of a payee, as to the circumstances in which such deductions may be made, and where such deductions are made, as to the date on which the relevant debts are to be treated as paid. Provision for the production to, and inspection by, persons authorised by the Board of wages sheets and other documents and records for the purposes of satisfying themselves that amounts have been and are being deducted, repaid and accounted for in accordance with the regulations. Provision for requiring an employer or former employer to provide any information, within a prescribed time, about payments or other benefits provided or to be provided, including those provided or to be provided in connection with— the termination of a person’s employment, or a change in the duties of or general earnings from a person’s employment. Provision— for authorising or requiring a person who provides with respect to payments of or on account of PAYE income a service that is specified or of a specified description (“a relevant payment service”) to supply to Her Majesty's Revenue and Customs information about payments with respect to which the service is provided, or any information the Commissioners may request about features of the service provided or to be provided with respect to particular payments; for conferring power on the Commissioners to specify by directions circumstances in which provision made by virtue of paragraph (a) or subsection (4ZB) is not to apply in relation to a payment; for securing that a supply of information that is authorised by regulations under paragraph (a) is not treated as breaching any obligation of confidence owed in respect of the information by the person supplying it; for prohibiting or restricting the disclosure, otherwise than to Her Majesty's Revenue and Customs, of information by a person to whom it was supplied pursuant to a requirement imposed by virtue of subsection (4ZB); for requiring a person who provides, or is to provide, a relevant payment service to take steps (including any steps that may be specified, or further specified, in accordance with item 8A(b)) for facilitating the meeting by persons making payments of obligations imposed by virtue of subsection (4ZB). Provision authorising the recovery from the payee rather than the payer of any amount that an officer of Revenue and Customs considers should have been deducted by the payer. Provision for and in connection with requiring the giving, in specified circumstances, of security (or further security) for the payment of amounts in respect of which a person is or may be accountable to the Commissioners under the regulations. Provision for the way in which any matters provided for by the regulations are to be proved. Provision— for requiring the payment of interest on sums due to the Board which are not paid by the due date, for determining the date (being not less than 14 days after the end of the tax year in respect of which the sums are due) from which such interest is to be calculated, and for enabling the repayment or remission of such interest or interest under section 101 of FA 2009. Provision for requiring the payment of interest on sums due from the Board and for determining the date from which such interest is to be calculated. Provision in connection with the recovery of amounts to which a person is jointly and severally liable as a result of Chapter 11 of Part 2 (umbrella companies). Provision for excluding payments of such description as may be specified from the operation of the regulations in such circumstances as may be specified. Provision for excluding payments of such description as may be specified from the operation of the regulations in such circumstances as may be specified. Provision for the making of decisions by Her Majesty’s Revenue and Customs as to any matter required to be decided for the purposes of the regulations and for appeals against such decisions. Provision requiring compliance with any directions the Commissioners may give— about the form and manner in which any information is to be provided under the regulations; specifying, or further specifying, steps for the purposes of item 4ZA(e); specifying information that a person making payments of or on account of PAYE income must provide about the method by which the payments are made. Provision for appeals with respect to matters arising under the regulations which would otherwise not be the subject of an appeal. Different provision for different cases or classes of case. Any incidental, consequential, supplementary and transitional provision which appears to the Board to be expedient. (3) The deductions of income tax— (a) required to be made by PAYE regulations under item 1 in the above list, or (b) which a person is authorised to make by PAYE regulations under item 1ZA in that list, may be required to be made at the basic rate or other rates in such cases or classes of case as may be provided by the regulations. (3A) PAYE regulations under item 2A in the above list may not make provision enabling deductions totalling more than £17,000 to be made from a payee's income for a tax year without the payee's consent. (3B) The Treasury may by order amend the amount specified in subsection (3A). (3C) References in items 4ZA and 8A of the above list to directions include directions making different provision for different cases. (4) Interest required to be paid by PAYE regulations under item 6 or 7 in the above list or by section 101 of FA 2009, in connection with sums due to the Commissioners under the PAYE Regulations, must be paid without any deduction of income tax and may not be taken into account in computing any income, profits or losses for any tax purposes. (4ZA) Item 8A in the above list does not prejudice the power of the Commissioners under subsection (1) to make provision in PAYE regulations about the matters mentioned in that item. (4ZB) The persons to whom PAYE information regulations may require information to be supplied include, in the case of information about a payment, a person who provides, or is to provide, with respect to the payment a service such as is mentioned in item 4ZA(a) in the above list. (4ZC) In subsection (4ZB) “PAYE information regulations” means PAYE regulations that require information to be supplied for any purpose authorised by subsections (1) and (2). (4A) A person who fails to comply with a requirement imposed under PAYE regulations to give security, or further security, for the payment of any amount commits an offence if the failure continues for such period as is specified; and a person guilty of an offence under this subsection is liable on summary conviction— (a) in England and Wales, to a fine; (b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale. (5) PAYE regulations must not affect any right of appeal to the tribunal which a person would have apart from the regulations. (6) It does not matter for the purposes of PAYE regulations that income is wholly or partly income for a tax year other than that in which the payment is made. (7) PAYE regulations have effect despite anything in the Income Tax Acts. (7A) Nothing in PAYE regulations may be read— (a) as preventing the making of arrangements for the collection of tax or other amounts in such manner as may be agreed by, or on behalf of, the payer and an officer of Revenue and Customs, or (b) as requiring the payer to comply with the regulations in circumstances in which an officer of Revenue and Customs is satisfied that it is unnecessary or not appropriate for the payer to do so. (7AA) In this Part “relevant debt”, in relation to a payee, means— (a) a sum payable by the payee to the Commissioners under or by virtue of an enactment, other than an excluded debt, and (b) a sum payable by the payee to the Commissioners under a contract settlement. (7AB) For the purposes of subsection (7AA)— (a) child tax credit or working tax credit that the payee is liable to repay is an excluded debt, and (b) if the payee is an employer, any amount that the payee is required to deduct from the PAYE income of employees for a tax year is an excluded debt until the tax year has ended. (7B) References in this section and section 685 to income tax in respect of PAYE income are references to income tax in respect of that income if reasonable assumptions are (when necessary) made about other income. (7C) In this section and section 685— “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs; “contract settlement” means an agreement made in connection with the liability of the payee or another person to make a payment to the Commissioners under or by virtue of an enactment; “payer” means any person paying PAYE income and “payee” means any person in receipt of such income; “specified” means specified in PAYE regulations. (8) In this Act and any other enactment (whenever passed) “PAYE regulations” means regulations under this section.

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685 Tax tables

(1) The Commissioners ... must construct tax tables with a view to securing that so far as possible— (a) the total income tax payable in respect of PAYE income for any tax year and any relevant debts payable during that tax year are deducted from PAYE income paid during that year, and (b) the income tax and any relevant debts deductible or repayable on the occasion of any payment of, or on account of, PAYE income are such that the following proportions are the same— (i) the proportion which the total net income tax and any relevant debts deducted since the beginning of the tax year bears to the total income tax and the total amount of any relevant debts payable for the year, and (ii) the proportion which the part of the tax year which ends with the date of the payment bears to the whole year. (2) References in subsection (1) to the total income tax payable for the year are to be read as references to the total income tax estimated to be payable for the year in respect of the income in question— (a) subject to a provisional deduction for allowances and reliefs, and (b) subject to an adjustment in respect of amounts required to be deducted or repaid by PAYE regulations made under item 1A, 2 , 2ZA or 2A in the list in section 684(2). (3) For the purpose of estimating the total income tax payable as mentioned in subsection (1)(a), it may be assumed, in relation to any payment of, or on account of, PAYE income, that the following proportions will be the same— (a) the proportion which the income paid in the part of the tax year which ends with the making of the payment bears to the income for the whole year, and (b) the proportion which that part of the tax year bears to the whole year. (4) PAYE regulations may make provision, where it appears to an officer of Revenue and Customs that it is impracticable for a payer to deduct tax by reference to tax tables— (a) for deductions to be made by the payer in accordance with other arrangements agreed as mentioned in section 684(7A)(a), or (b) for the payee to be required to keep records and make payments and returns as if he were the payer.

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686 Meaning of “payment”

(1) For the purposes of PAYE regulations, a payment of, or on account of, PAYE income of a person is treated as made at the earliest of the following times— Rule 1 The time when the payment is made. Rule 2 The time when the person becomes entitled to the payment. Rule 3 If the person is a director of a company and the income is income from employment with the company (whether or not as director), whichever is the earliest of— (a) the time when sums on account of the income are credited in the company’s accounts or records (whether or not there is any restriction on the right to draw the sums); (b) if the amount of the income for a period is determined before the period ends, the time when the period ends; (c) if the amount of the income for a period is not determined until after the period has ended, the time when the amount is determined. But this is subject to subsection (5) (PAYE pension income: social security pension lump sums). (2) Rule 3 applies if the person is a director of the company at any time in the tax year in which the time mentioned falls. (3) In this section “director” means— (a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or body, (b) in relation to a company whose affairs are managed by a single director or other person, that director or person, and (c) in relation to a company whose affairs are managed by the members themselves, a member of the company, and includes any person in accordance with whose directions or instructions the company’s directors (as defined above) are accustomed to act. (4) For the purposes of subsection (3) a person is not regarded as a person in accordance with whose directions or instructions the company’s directors are accustomed to act merely because the directors act on advice given by that person in a professional capacity. (5) For the purposes of PAYE regulations, a payment of, or on account of, an amount which is PAYE pension income of a person by virtue of section 683(3A) (social security pension lump sums) is to be treated as made at the time when the payment is made.

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687 Payments by intermediary

(1) If any payment of, or on account of, PAYE income of an employee is made by an intermediary of the employer, the employer is to be treated, for the purposes of PAYE regulations, as making a payment of the income of an amount equal to the amount given by subsection (3). (2) Subsection (1) does not apply if the intermediary (whether or not a person to whom PAYE regulations apply) deducts income tax and any relevant debts from the payment the intermediary makes, and accounts for it, in accordance with PAYE regulations. (3) The amount referred to is— (a) if the amount of the payment made by the intermediary is an amount to which the recipient is entitled after deduction of income tax and any relevant debts , the aggregate of the amount of the payment and the amount of any income tax due and any relevant debts deductible , and (b) in any other case, the amount of the payment. (4) For the purposes of this section a payment of, or on account of, PAYE income of an employee is made by an intermediary of the employer if it is made— (a) by a person acting on behalf of the employer and at the expense of the employer or a person connected with the employer, or (b) by trustees holding property for any persons who include or class of persons which includes the employee. (5) This section does not apply in relation to a payment so far as the sum paid is employment income under Chapter 2 of Part 7A.

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687A Payment of employment income under Part 7A

(1) This section applies if— (a) the value of a relevant step counts as employment income under Chapter 2 of Part 7A, and (b) the relevant step is the payment of a sum of money, and references to A and B are to be read accordingly. (2) For the purposes of PAYE regulations B is treated as making a payment of PAYE income of A of an amount which, on the basis of the best estimate which can reasonably be made, is the amount of the employment income. (3) The payment is treated as made on the latest of the following days— (a) the day on which the relevant step is taken, (b) the day on which A's employment with B starts, and (c) the day which is 30 days after the day on which FA 2011 is passed. (4) Subsection (2) does not apply if the person who takes the relevant step (whether or not a person to whom PAYE regulations apply) deducts income tax from the payment, and accounts for it, in accordance with PAYE regulations.

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688 Agency workers

(1) This section applies if the remuneration receivable by an individual in consequence of providing services falls to be treated under section 44 (agency workers) as earnings from an employment. (1A) The relevant provisions have effect as if the individual held the employment with or under the deemed employer, subject to subsection (2). (1B) For the purposes of sections 687, 689 and 689A, if— (a) a person other than the deemed employer or an intermediary of the deemed employer makes a payment of, or on account of, PAYE income of the individual, and (b) the payment is not within subsection (2), the person is to be treated as making the payment as an intermediary of the deemed employer. (2) If— (a) the client is not the deemed employer, and (b) a payment of, or on account of, PAYE income of the individual is made by a person acting on behalf of the client, and at the expense of the client or a person connected with the client, section 687 and, in relation to any payment treated as made by the client under section 687, section 710 have effect in relation to the payment as if the client and not the deemed employer were the employer for the purposes of the relevant provisions. (2A) PAYE regulations may make provision for, or in connection with, the recovery from a director or officer of a company, in such circumstances as may be specified in the regulations, of— (a) any amount the company is, by virtue of section 44(4) to (6) or 46A, to deduct, or account for, in accordance with PAYE regulations, and (b) any interest or penalty, in respect of an amount within paragraph (a), for which the company is liable. (3) In this section— “the client” means the person who is the client for the purposes of section 44; “company" includes a limited liability partnership; “the deemed employer” means the person with whom the individual is treated under section 44 as having an employment, the duties of which consist of the services; “director” has the meaning given by section 67; “officer” in relation to a company, means any manager, secretary or other similar officer of the company, or any person acting or purporting to act as such; “the relevant provisions” means this Chapter except section 691, Chapter 4 of this Part and section 710.

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688A Managed service companies: recovery from other persons

(1) PAYE regulations may make provision authorising the recovery from a person within subsection (2) of any amount that an officer of Revenue and Customs considers should have been deducted by a managed service company (“the MSC”) from a payment of, or on account of, PAYE income of an individual. (2) The persons are— (a) a director or other office-holder, or an associate, of the MSC, (b) an MSC provider, (c) a person who (directly or indirectly) has encouraged or been actively involved in the provision by the MSC of the services of the individual, and (d) a director or other office-holder, or an associate, of a person (other than an individual) who is within paragraph (b) or (c). (3) A person does not fall within subsection (2)(c) merely by virtue of— (a) providing legal or accountancy advice in a professional capacity, or (b) placing the individual with persons who wish to obtain the services of the individual (including by contracting with the MSC for the provision of those services). (4) The supplementary provision that may be made by the regulations includes provision as to the liability of one person within subsection (2) to another such person. (5) In this section— “associate” has the meaning given by section 61I, “director” has the meaning given by section 67, “managed service company” has the meaning given by section 61B but for the purposes of section 339A has the meaning given by subsection (11) of that section , and “MSC provider” means an MSC provider who is involved with the MSC (within the meaning of section 61B). (6) Section 61C(4) (extended meaning of “associate”) applies for the purposes of subsection (2)(d). (7) The Treasury may by order amend this section (but not this subsection or subsection (8)). (8) The Treasury must not make an order under subsection (7) unless a draft of it has been laid before and approved by a resolution of the House of Commons.

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688AA Workers' services provided through intermediaries: recovery of PAYE

(1) PAYE Regulations may make provision for, or in connection with, the recovery of a deemed employer PAYE debt from a relevant person. (2) “A deemed employer PAYE debt” means an amount— (a) that a person (“the deemed employer”) is liable to pay under PAYE regulations in consequence of being treated under section 61N(3) as having made a deemed direct payment to a worker (other than by virtue of section 61WA), and (b) that an officer of Revenue and Customs considers there is no realistic prospect of recovering from the deemed employer within a reasonable period. (3) “Relevant person”, in relation to a deemed employer PAYE debt, means a person who is not the deemed employer and who— (a) is the highest person in the chain identified under section 61N(1) in determining that the deemed employer is to be treated as having made the deemed direct payment, or (b) is the second highest person in that chain and is a qualifying person (within the meaning given by section 61N(8)) at the time the deemed employer is treated as having made that deemed direct payment.

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688AB Workers’ providing services through intermediaries etc: cases where taxes already paid

(1) PAYE regulations may make the following provision. (2) Provision for an amount to be treated as having been recovered from the payee, and for that amount not to be recoverable from the payer (“the deemed employer”), where— (a) the deemed employer would otherwise be liable to pay an amount under PAYE regulations in consequence of being treated under section 61N(3) as having made a deemed direct payment to a worker (other than by virtue of section 61WA), and (b) an amount of income tax or corporation tax has already been paid, or assessed, in respect of income referable to that payment. (3) Provision for the amount referred to in the opening words of subsection (2) to be the best estimate which can reasonably be made by an officer of Revenue and Customs (whether generally or specifically) of the amount referred to in subsection (2)(b). (4) Provision preventing a person specified in PAYE regulations from— (a) making a claim for the repayment of, or relief in respect of, an amount referred to in subsection (2)(b), or (b) deducting, or setting off, the amount referred to in that subsection from, or against, any tax liability of the person, in a case where an estimate of that amount is treated as having been recovered from the payee as a result of provision made by virtue of this section. (5) In this section, “payee” and “payer” have the same meaning as in section 684 (see subsection (7C) of that section).

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688B Travel expenses of workers providing services through intermediaries: recovery of unpaid tax

(1) PAYE regulations may make provision for, or in connection with, the recovery from a director or officer of a company, in such circumstances as may be specified in the regulations, of amounts within any of subsections (2) to (5). (2) An amount within this subsection is an amount that the company is to account for in accordance with PAYE regulations by virtue of section 339A(7) to (9) (persons providing fraudulent documents). (3) An amount within this subsection is an amount which the company is to deduct and pay in accordance with PAYE regulations by virtue of section 339A in circumstances where— (a) the company is an employment intermediary, (b) on the basis that section 339A does not apply by virtue of subsection (3) of that section, the company has not deducted and paid the amount, but (c) the company has not been provided by any other person with evidence from which it would be reasonable in all the circumstances to conclude that subsection (3) of that section applied (and the mere assertion by a person that the manner in which the worker provided the services was not subject to (or to the right of) supervision, direction or control by any person is not such evidence). (4) An amount within this subsection is an amount that the company is to deduct and pay in accordance with PAYE regulations by virtue of section 339A in a case where subsection (4) of that section applies (services provided under arrangements made by intermediaries). (5) An amount within this subsection is any interest or penalty in respect of an amount within any of subsections (2) to (4) for which the company is liable. (6) In this section— “company” includes a limited liability partnership; “director” has the meaning given by section 67; “employment intermediary” has the same meaning as in section 339A; “officer”, in relation to a company, means any manager, secretary or other similar officer of the company, or any person acting or purporting to act as such

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689 Employee of non-UK employer

(1) This section applies if— (a) an employee during any period works for a person (“the relevant person”) who is not the employer of the employee, (b) any payment of, or on account of, PAYE income of the employee in respect of that period is made by a person who is the employer or an intermediary of the employer or of the relevant person, (c) PAYE regulations do not apply to the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer, and (d) income tax and any relevant debts are not deducted, or not accounted for, in accordance with the regulations by the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer. (1ZA) But this section does not apply if section 689A applies or would apply but for a certificate issued under regulations made under subsection (7) of that section. (1A) Subject to subsection (4), subsection (1)(b) does not apply in relation to a payment so far as the sum paid is employment income under Chapter 2 of Part 7A. (1B) Subsection (1C) applies if— (a) the employee worked for the relevant person during the period under or in consequence of arrangements made between the relevant person and a third person, (b) the third person did not make the payment of, or on account of, PAYE income of the employee, and (c) PAYE regulations would apply to the third person if the third person were to make a payment of, or on account of, PAYE income of the employee. (1C) The third person is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the employee of an amount equal to the amount given by subsection (3). (2) If subsection (1C) does not apply, the relevant person is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the employee of an amount equal to the amount given by subsection (3). (3) The amount referred to is— (a) if the amount of the payment actually made is an amount to which the recipient is entitled after deduction of income tax and any relevant debts due under the PAYE regulations , the aggregate of the amount of the payment and the amount of any income tax and any relevant debts deductible due, and (b) in any other case, the amount of the payment. (4) If, by virtue of any of sections 61Z1(5)(c)(i), 687A and 693 to 700, an employer would be treated for the purposes of PAYE regulations (if they applied to the employer) as making a payment of any amount to an employee, and if the case is not within subsection (4A), this section has effect as if— (a) the employer were also to be treated for the purposes of this section as making an actual payment of that amount, and (b) paragraph (a) of subsection (3) were omitted. (4A) A case is within this subsection if— (a) the section concerned is section 687A or 695A (employment income under Part 7A), and (b) the relevant step concerned is within paragraph 1 of Schedule 11 to F(No. 2)A 2017 (loans etc outstanding on 5 April 2019). (And this section does not apply in a case within this subsection.) (5) For the purposes of this section a payment of, or on account of, PAYE income of an employee is made by an intermediary of the employer or of the relevant person if it is made— (a) by a person acting on behalf of the employer or the relevant person and at the expense of the employer or the relevant person or a person connected with the employer or the relevant person, or (b) by trustees holding property for any persons who include or class of persons which includes the employee. (6) In this section and sections 690 and 691 “work”, in relation to an employee, means the performance of any duties of the employment of the employee and any reference to the employee’s working is to be read accordingly.

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689A Oil and gas workers on the continental shelf

(1) This section applies if— (a) any payment of, or on account of, PAYE income of a continental shelf worker in respect of a period is made by a person who is the employer or an intermediary of the employer or of the relevant person, (b) PAYE regulations do not apply to the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, to the employer, and (c) income tax and any relevant debts are not deducted, or not accounted for, in accordance with PAYE regulations by the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, by the employer. (2) Subject to subsection (5), subsection (1)(a) does not apply in relation to a payment so far as the sum paid is employment income under Chapter 2 of Part 7A. (3) The relevant person is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the continental shelf worker of an amount equal to the amount given by subsection (4). (4) The amount referred to is— (a) if the amount of the payment actually made is an amount to which the recipient is entitled after deduction of income tax and any relevant debts under PAYE regulations, the aggregate of the amount of the payment and the amount of any income tax due and any relevant debts deductible, and (b) in any other case, the amount of the payment. (5) If, by virtue of any of sections 687A and 693 to 700, an employer would be treated for the purposes of PAYE regulations (if they applied to the employer) as making a payment of any amount to a continental shelf worker, this section has effect as if— (a) the employer were also to be treated for the purposes of this section as making an actual payment of that amount, and (b) paragraph (a) of subsection (4) were omitted. (6) For the purposes of this section a payment of, or on account of, PAYE income of a continental shelf worker is made by an intermediary of the employer or of the relevant person if it is made— (a) by a person acting on behalf of the employer or the relevant person and at the expense of the employer or the relevant person or a person connected with the employer or the relevant person, or (b) by trustees holding property for any persons who include, or a class of persons which includes, the continental shelf worker. (7) PAYE regulations may make provision for, or in connection with, the issue by Her Majesty's Revenue and Customs of a certificate to a relevant person in respect of one or more continental shelf workers— (a) confirming that, in respect of payments of, or on account of, PAYE income of the continental shelf workers specified or described in the certificate, income tax and any relevant debts are being deducted, or accounted for, as mentioned in subsection (1)(c), and (b) disapplying this section in relation to payments of, or on account of, PAYE income of those workers while the certificate is in force. (8) Regulations under subsection (7) may, in particular, make provision about— (a) applying for a certificate; (b) the circumstances in which a certificate may, or must, be issued or cancelled; (c) the form and content of a certificate; (d) the effect of a certificate (including provision modifying the effect mentioned in subsection (7)(b) or specifying further effects); (e) the effect of cancelling a certificate. (9) Subsection (10) applies if— (a) there is more than one relevant person in relation to a continental shelf worker, and (b) in consequence of the same payment within subsection (1)(a), each of them is treated under subsection (3) as making a payment of PAYE income of the worker. (10) If one of the relevant persons complies with section 710 (notional payments: accounting for tax) in respect of the payment that person is treated as making, the other relevant persons do not have to comply with that section in respect of the payments they are treated as making. (11) In this section— “continental shelf worker” means a person in an employment some or all of the duties of which are performed— in the UK sector of the continental shelf (as defined in section 41), and in connection with exploration or exploitation activities (as so defined); “employer” means the employer of the continental shelf worker; “relevant person”, in relation to a continental shelf worker, means— if the employer has an associated company (as defined in section 449 of CTA 2010) with a place of business or registered office in the United Kingdom, the associated company, or in any other case, the person who holds the licence under Part 1 of the Petroleum Act 1998 in respect of the area of the UK sector of the continental shelf where some or all of the duties of the continental shelf worker's employment are performed. (12) The Treasury may by regulations modify the definitions of “continental shelf worker” and “relevant person”, as the Treasury thinks appropriate. (13) Regulations under subsection (12) may— (a) make different provision for different cases or different purposes, (b) make incidental, consequential, supplementary or transitional provision or savings, and (c) amend this section.

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690 Internationally mobile employees

(1) This section applies in relation to an employee if the employee is or has been internationally mobile at any time in tax year 2025-26 or a subsequent tax year. (2) An employee is “internationally mobile” at a time in a tax year if at that time the employee works or is likely to work both inside and outside the UK during the tax year (“the mobile tax year”) and at that time— (a) the employee is or is likely to be non-UK resident for the mobile tax year, or (b) the mobile tax year is or is likely to be a split year as respects the employee. (3) If the employer makes an uncertain payment to the employee in any tax year, the entire uncertain payment is to be treated for the purposes of PAYE regulations as a payment of PAYE income of the employee. (4) For the purposes of this section and sections 690A and 690B, an “uncertain payment” means a payment or part of a payment of, or on account of, the income of the employee in respect of which— (a) the employer is unable to ascertain the extent to which the income relating to that payment or part is PAYE income, and (b) the reason for the employer being unable to ascertain that extent is connected to the employee being or having been internationally mobile in the mobile tax year. (5) Subsection (3) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid. (6) For the purposes of this section and sections 690A to 690E— (a) any reference to a payment made by the employer includes a reference to a payment made by a person acting on behalf of the employer and at the expense of the employer or a person connected with the employer, and (b) in a case where section 689 or 689A applies, any reference to a payment made by the employer is to be read as a reference to a payment treated, for the purposes of PAYE regulations, as made by the relevant person.

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690A Employer notification for internationally mobile employees

(1) This section applies in relation to an employee if the employee is or has been internationally mobile within the meaning of section 690(2) at any time in tax year 2025-26 or a subsequent tax year (“the mobile tax year”). (2) The appropriate person may give a notice to an officer of Revenue and Customs at any time during the mobile tax year— (a) that the employer is proposing to treat the non-PAYE proportion of any mobile payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and (b) specifying that proportion. (2A) For the purposes of this section and section 690B— (a) “mobile payment” means a payment of, or on account of, an amount of employment income of the employee in respect of which— (i) the extent to which the income is PAYE income depends or may depend on the extent to which the employee’s duties during the mobile tax year are performed in the United Kingdom, and (ii) the reason it depends or may depend on that extent is connected to the employee being or having been internationally mobile in the mobile tax year; (b) “non-PAYE proportion” means the best estimate that can reasonably be made of the overall proportion of the amount of all mobile payments made by the employer to the employee that would not be PAYE income if the employee were non-UK resident for the mobile tax year or the mobile tax year were a split year as respects the employee (as appropriate). (3) If a notice given under this section has effect, the proportion of any mobile payment made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice. (4) But subsection (3) does not apply to a mobile payment— (a) to the extent that section 690D(4) or 690E(4) (qualifying payments or treaty affected payments) also applies to the payment, or (b) if the payment is made after the end of the mobile tax year, other than to the extent the payment is also an uncertain payment. (5) A notice given under this section— (a) does not have effect if a direction has previously been given to the appropriate person under section 690B (direction by HMRC in relation to internationally mobile employees) in relation to the employee and the mobile tax year; (b) otherwise, has effect when it is acknowledged by an officer of Revenue and Customs. (6) A notice given under this section ceases to have effect if— (a) a direction under section 690B is given to the appropriate person in relation to the employee and the mobile tax year, (aa) as a result of a change in the employee’s circumstances, the proportion specified in the notice ceases to be a reasonable estimate of the non-PAYE proportion, (b) a subsequent notice is given by the appropriate person under this section in relation to the employee and the mobile tax year and is acknowledged by an officer of Revenue and Customs, or (c) section 690D (qualifying new resident or treaty non-resident employee) begins to apply in relation to the employee and the mobile tax year and the mobile tax year is not likely to be a split year as respects the employee. (7) A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs. (8) Subsection (3) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid. (9) For the purposes of this section and sections 690B, 690D and 690E — (a) where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 693 (cash vouchers), section 694 (non-cash vouchers) or section 695 (credit-tokens), the employer is to be treated as making a payment of that amount of employment income, and (b) “the appropriate person” means— (i) the person designated by the employer for the purpose of this section and sections 690B, 690D and 690E and, if no person is so designated, the employer, and (ii) in a case where section 689 or 689A applies, the references to the employer in sub-paragraph (i) are to be read as references to the relevant person (within the meaning of section 689 or 689A).

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690B Direction by HMRC in relation to internationally mobile employees

(1) This section applies where— (a) a notice given during the mobile tax year under section 690A has effect, ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) An officer of Revenue and Customs may give a direction— (a) for determining the non-PAYE proportion, or (b) that any uncertain payment is to be treated entirely as PAYE income for the purposes of PAYE regulations. (3) A direction under subsection (2)— (a) must specify the employee and the mobile tax year, (b) must be given by notice to the appropriate person, and (c) may be varied by notice to the appropriate person from a date specified in the notice (which may not be earlier than 30 days from the date on which the notice is given). (4) If— (a) a direction under subsection (2) has effect, and (b) any uncertain payment or mobile payment (as applicable) is made by the employer to the employee in any tax year, the direction applies in relation to the payment. (4A) But a direction for determining the non-PAYE proportion does not apply in relation to a mobile payment— (a) to the extent that section 690D(4) or 690E(4) (qualifying payments or treaty affected payments) also applies to the payment, or (b) if the payment is made after the end of the mobile tax year, other than to the extent the payment is also an uncertain payment. (5) A direction under subsection (2) has effect when it is given. (6) A direction under subsection (2) ceases to have effect if— (a) the notice to which the direction relates was given on the basis that the employee was likely to be non-UK resident for the mobile tax year, and (b) a notice has subsequently been— (i) given by the appropriate person under section 690D (employer notification for qualifying new resident or treaty non-resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year or treaty non-resident at any time in the mobile tax year, and (ii) acknowledged by an officer of Revenue and Customs. (7) Subsection (4) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

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690C Employees who were internationally mobile etc. before 2025-26

(1) This section applies in relation to an employee if the employee falls within subsection (2) or (3) in relation to a tax year that was before tax year 2025-26. (2) An employee falls within this subsection in relation to a tax year if the employee worked both inside and outside the UK in that tax year and— (a) the employee was non-UK resident for that tax year or it appears likely to the employer that the employee was non-UK resident, or (b) the tax year was a split year as respects the employee or it appears likely to the employer that the tax year was such a year. (3) An employee falls within this subsection in relation to a tax year if— (a) the employee worked outside the UK in the tax year, (b) the employee met the requirement of section 26A for that tax year or it appears likely to the employer that the employee met that requirement, and (c) the employee has made a claim under section 809B of ITA 2007 (claim for remittance basis) for that tax year or it appears likely to the employer that the employee has or will make such a claim. (4) If the employer makes a payment to the employee of, or on account of, general earnings for that tax year, the amount of the payment that is to be treated as PAYE income for the purposes of the PAYE regulations is the amount that, on the basis of the best estimate that can be reasonably made, is likely to be PAYE income. (5) For the purposes of subsection (4)— (a) where this section applies to an employee because it appears likely to the employer that a certain state of affairs exists, the employer may assume that state of affairs exists; (b) whether general earnings are “for” that tax year is determined in accordance with sections 29 and 30.

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690D Employer notification for qualifying new residents or treaty non-residents

(1) This section applies in relation to an employee if— (a) the employee is or is likely to be a qualifying new resident for a tax year (“the notifiable year”), and (b) the employee works or is likely to work outside the UK during the notifiable year. (1A) This section also applies in relation to an employee if— (a) the employee is or is likely to be a treaty non-resident at any time in a tax year (“the notifiable year”), and (b) the employee works or is likely to work outside the UK during the notifiable year. (2) If this section applies in relation to the employee by virtue of subsection (1), the appropriate person may give a notice to an officer of Revenue and Customs at any time during the notifiable year— (a) that the employer is proposing to treat the foreign proportion of any qualifying payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and (b) specifying that proportion (but see subsections (5A) and (5B)). (2A) If this section applies in relation to the employee by virtue of subsection (1A), the appropriate person may give a notice to an officer of Revenue and Customs at any time during the notifiable year— (a) that the employer is proposing to treat the treaty relieved proportion of any treaty affected payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and (b) specifying that proportion (but see subsections (5A) and (5B)). (3) For the purposes of this section and section 690E— (a) a “qualifying payment” means a payment of, or on account of, an amount of employment income of the employee that is likely to be qualifying employment income; (b) the “foreign proportion” of a qualifying payment is — (i) the best estimate that can reasonably be made of the overall proportion of the amount of all qualifying payments made by the employer to the employee that is likely to be qualifying foreign employment income, or ; (ii) if the best estimate mentioned in sub-paragraph (i) is greater than 30%, 30%. (c) a “treaty affected payment” means a payment of, or on account of, an amount of employment income of the employee a proportion in respect of which UK tax is likely to be relieved under double taxation arrangements as a result of the employee being treaty non-resident in the notifiable year; (d) the “treaty relieved proportion” is the best estimate that can reasonably be made of the overall proportion of the amount of all treaty affected payments made by the employer to the employee in respect of which UK tax is likely to be relieved under double taxation arrangements. (4) If a notice given under this section has effect, the proportion of any qualifying payment or treaty affected payment (as applicable) made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice. (5) A notice given under this section— (a) does not have effect if a direction has previously been given to the appropriate person under section 690E (direction by HMRC in relation to qualifying new residents or treaty non-residents) in relation to the employee and the notifiable year; (b) otherwise, has effect when it is acknowledged by an officer of Revenue and Customs. (5A) Subsection (5B) applies for the purposes of determining the proportion to be specified in a notice or notices under this section in circumstances where, if the notice or notices were to be given and acknowledged by an officer of Revenue and Customs, a notice given under both subsection (2) and subsection (2A) would have effect in relation to the employee and the notifiable year. (5B) The proportion specified in the notice or notices must produce the result that no amount is reflected in both— (a) the foreign proportion specified in the notice under subsection (2) as an amount that is likely to be qualifying foreign employment income, and (b) the treaty relieved proportion specified in the notice under subsection (2A) as an amount in respect of which UK tax is likely to be relieved under double taxation arrangements. (6) A notice given under this section ceases to have effect if— (a) a direction under section 690E is given to the appropriate person in relation to the employee and the notifiable year, (aa) as a result of a change in the employee’s circumstances, the proportion specified in the notice ceases to be a reasonable estimate of the overall proportion of the amount (as applicable) of— (i) all qualifying payments that is likely to be qualifying foreign employment income, or (ii) all treaty affected payments in respect of which UK tax is likely to be relieved under double taxation arrangements, (b) a subsequent notice— (i) is given by the appropriate person in relation to the employee and the notifiable year under the same subsection, and (ii) is acknowledged by an officer of Revenue and Customs, (c) the appropriate person notifies (in writing or otherwise) an officer of Revenue and Customs that the notice is to cease to have effect, or (c) a subsequent notice— (i) is given by the appropriate person under section 690A (employer notification for internationally mobile employee) on the basis that the employee is or is likely to be non-UK resident in the notifiable year, and (ii) is acknowledged by an officer of Revenue and Customs. (7) A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs. (8) Subsection (4) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid. (9) For the purposes of this section and section 690E— (a) where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 687A or 695A (employment income under Part 7A) or section 696 (readily convertible assets), the employer is to be treated as making payment of that amount of employment income, ... (b) “qualifying new resident”, “qualifying employment income” and “qualifying foreign employment income” have the same meaning as in Chapter 5C of Part 2 (relief for new residents on foreign employment income). (c) an individual is “treaty non-resident” at any time if, at that time, the individual falls to be regarded as resident in a territory outside the UK for the purposes of double relief arrangements having effect at the time, and (d) “double taxation arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010.

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690E Direction by HMRC in relation to qualifying new residents or treaty non-residents

(1) This section applies where— (a) a notice given during the notifiable year under section 690D has effect, ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) An officer of Revenue and Customs may give a direction— (a) for determining a proportion of any qualifying payment or treaty affected payment (as applicable) made by the employer to the employee which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income, or (b) that any such payment is to be treated entirely as PAYE income for the purposes of PAYE regulations. (3) A direction under subsection (2)— (a) must specify the employee and the notifiable year, (b) must be given by notice to the appropriate person, and (c) may be varied by notice to the appropriate person from a day specified in the notice (which may not be earlier than 30 days from the date on which the notice is given). (4) If— (a) a direction under subsection (2) has effect, and (b) any qualifying payment or treaty affected payment (as applicable) is made by the employer to the employee in any tax year, the direction applies to the payment. (5) A direction under subsection (2) has effect when it is given. (6) A direction under subsection (2) ceases to have effect if a notice has subsequently been— (a) given by the appropriate person under section 690A (employer notification for internationally mobile employee) on the basis that the employee is or is likely to be non-UK resident for the notifiable year, and (b) acknowledged by an officer of Revenue and Customs. (7) Subsection (4) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

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691 Mobile UK workforce

(1) This section applies if it appears to the Commissioners for Her Majesty’s Revenue and Customs that— (a) a person (“the relevant person”) has entered into or is likely to enter into an agreement that employees of another person (“the contractor”) are in any period to work for, but not as employees of, the relevant person, (b) payments of, or on account of, PAYE income of the employees in respect of work done in that period are likely to be made by or on behalf of the contractor, and (c) PAYE regulations would apply on the making of such payments but it is likely that income tax and any relevant debts will not be deducted, or will not be accounted for, in accordance with the regulations. (2) The Commissioners may give a direction that, if— (a) any of the employees of the contractor work in any period for, but not as employees of, the relevant person, and (b) any payment is made by the relevant person in respect of work done by the employees in that period, income tax and any relevant debts are to be deducted in accordance with the provisions of this section by the relevant person on making the payment. (3) A direction under subsection (2)— (a) must specify the relevant person and the contractor to whom it relates; (b) must be given by notice to the relevant person; and (c) may at any time be withdrawn by notice to the relevant person. (4) The Commissioners must take such steps as are reasonably practicable to ensure that a contractor is supplied with a copy of any notice under subsection (3) which relates to him. (5) If— (a) a direction under subsection (2) has effect, and (b) any employees of the contractor specified in the direction work for, but not as employees of, the relevant person so specified, income tax and any relevant debts are, subject to and in accordance with PAYE regulations, to be deducted by the relevant person on making any payment in respect of that work as if so much of the payment as is attributable to work done by each employee were a payment of PAYE income of that employee.

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692 Organised arrangements for sharing tips

(1) PAYE regulations may make provision with respect to organised arrangements for tips to be shared among employees by a person (“P”) who is not the principal employer. (2) PAYE regulations may include provisions which, for the purposes of PAYE regulations— (a) treat every payment made by P to an employee by way of the employee’s share of any tips (including the retention by P of P’s own share if P is an employee) as a payment of PAYE income by P, and (b) treat P as the employer in relation to every such payment. (3) PAYE regulations may also include provisions which— (a) apply if P has failed to comply with any of the requirements of PAYE regulations, and (b) treat the principal employer, for the purposes of PAYE regulations, as making payments to the employees of any tips paid over to P by the principal employer. (4) In this section— “the principal employer” means the person under whose general control and management the employees work; “tips” means gratuities and service charges.

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693 Cash vouchers

(1) If a cash voucher to which Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) applies is received by an employee at any time, the employer is to be treated, for the purposes of PAYE regulations, as making at that time a payment of PAYE income of the employee of an amount equal to the amount ascertained under subsection (2) of, or (as the case may be) referred to in subsection (1A)(b) of, section 81 (benefit of cash voucher treated as earnings). (2) This section does not apply to the provision of a cash voucher if— (a) the voucher is used to meet expenses, and (b) if the amount for which the voucher is capable of being exchanged had been paid directly to the employee by his or her employer, the amount would not have been PAYE income except by virtue of section 70 (sums in respect of expenses). (3) This section does not apply to the provision of a cash voucher if it is exchanged for an amount which— (a) is used to meet expenses, and (b) if it had been paid directly to the employee by the employer, would not have been PAYE income except by virtue of section 70. (4) PAYE regulations may exclude from the scope of this section the provision of cash vouchers in circumstances specified in the regulations. (5) A cash voucher provided for an employee and appropriated to the employee— (a) by attaching it to a card held for the employee, or (b) in any other way, is to be treated for the purposes of this section as having been received by the employee at the time when it is appropriated.

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694 Non-cash vouchers

(1) If a non-cash voucher to which this section applies is received by an employee, the employer is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the employee of an amount equal to the amount ascertained under section 87(2) or 87A(4) (benefit of non-cash voucher treated as earnings). (2) This section applies to a non-cash voucher to which Chapter 4 of Part 3 (taxable benefits: vouchers and credit-tokens) applies if— (a) either of the conditions set out below is met with respect to the voucher, and (b) the voucher is not of a description for the time being excluded from the scope of this section by PAYE regulations. (3) The first condition is met with respect to a non-cash voucher if it is capable of being exchanged for anything which, if provided to the employee at the time when the voucher is received, would fall to be regarded as a readily convertible asset. (4) The second condition is met with respect to a non-cash voucher if (but for section 701(2)(b)) it would fall itself to be regarded as a readily convertible asset. (5) A payment under subsection (1) is made— (a) in the case of a non-cash voucher other than a cheque voucher, at the time when the cost of provision is incurred or, if later, the time when the voucher is received by the employee; (b) in the case of a cheque voucher, at the time when the voucher is handed over in exchange for money, goods or services. (6) For the purposes of subsection (5)— “cheque voucher” has the same meaning as in Chapter 4 of Part 3; “cost of provision”, in relation to a voucher provided by an employer, has the meaning given by section 87; and a cheque voucher that is posted is to be treated as handed over at the time of posting. (7) A non-cash voucher provided for an employee and appropriated to the employee— (a) by attaching it to a card held for the employee, or (b) in any other way, is to be treated for the purposes of this section as having been received by the employee at the time when it is appropriated.

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695 Credit-tokens

(1) On each occasion on which an employee uses a credit-token provided to the employee because of the employee’s employment to obtain— (a) money, or (b) anything which, if provided to the employee at the time when the credit-token is used, would fall to be regarded as a readily convertible asset, the employer is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the employee of an amount equal to the amount ascertained under section 94(2) (benefit of credit-token treated as earnings). (1A) If the credit-token is provided pursuant to optional remuneration arrangements, the reference in subsection (1) to the amount ascertained under section 94(2) is to be read as a reference to what that amount would be were the credit-token provided otherwise than pursuant to optional remuneration arrangements. In this subsection “optional remuneration arrangements” is to be interpreted in accordance with section 69A. (2) The use of a credit-token by an employee to obtain money is excluded from the scope of this section if the money— (a) is used to meet expenses, and (b) if it had been paid directly to the employee by the employer, would not have been PAYE income except by virtue of section 70 (sums in respect of expenses). (3) PAYE regulations may make provision for excluding from the scope of this section any other description of use of a credit-token.

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695A Employment income under Part 7A

(1) This section applies if— (a) the value of a relevant step counts as employment income under Chapter 2 of Part 7A, and (b) the relevant step is not the payment of a sum of money, and references to A and B are to be read accordingly. (2) For the purposes of PAYE regulations B is treated as making a payment of PAYE income of A of an amount which, on the basis of the best estimate which can reasonably be made, is— (a) the amount of the employment income, less (b) so much of that amount (if any) to which section 554Z9(2) or 554Z10(2) applies. (3) The payment is treated as made on the latest of the following days— (a) the day on which the relevant step is taken, (b) the day on which A's employment with B starts, and (c) the day which is 30 days after the day on which FA 2011 is passed. (4) Subsection (2) does not apply if the person who takes the relevant step (whether or not a person to whom PAYE regulations apply) accounts for income tax on the relevant step in accordance with PAYE regulations.

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696 Readily convertible assets

(1) If any PAYE income of an employee is provided in the form of a readily convertible asset, the employer is to be treated, for the purposes of PAYE regulations, as making a payment of that income of an amount equal to the amount given by subsection (2). (2) The amount referred to is the amount which, on the basis of the best estimate that can reasonably be made, is the amount of income likely to be PAYE income in respect of the provision of the asset. (3) This section does not apply to any PAYE income so far as it is employment income under Chapter 2 of Part 7A.

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697 Enhancing the value of an asset

(1) This section applies if— (a) any PAYE income of an employee is provided in the form of anything enhancing the value of an asset in which the employee or a member of the employee’s family or household already has an interest, and (b) that asset, with its value enhanced, would be treated as a readily convertible asset if PAYE income were provided to the employee in the form of the asset at the time of the enhancement. (2) Section 696 has effect as if— (a) the employee had been provided, at the time of the enhancement, with PAYE income in the form of the asset (with its value enhanced), instead of with what enhanced its value, and (b) the reference in subsection (2) to the provision of the asset were a reference to the enhancement of its value. (3) Any reference in this section to enhancing the value of an asset is a reference to— (a) the provision of any services by which the asset or any right or interest in it is improved or otherwise made more valuable, (b) the provision of any property the addition of which to the asset improves it or otherwise increases its value, or (c) the provision of any other enhancement by the application of money or property to the improvement of the asset or to securing an increase in its value or the value of any right or interest in it. (4) There is excluded from the scope of what constitutes enhancing the value of an asset for the purposes of this section any enhancement of value arising on the acquisition by the employee (whether or not as a result of the exercise of a right to acquire shares) of— (a) any shares acquired by the employee under a scheme approved under ... Schedule 9 to ICTA (approved profit sharing schemes), (aa) any shares acquired by the employee under a scheme which is a Schedule 3 SAYE option scheme (see Schedule 3), (ab) any shares acquired by the employee under a scheme which is a Schedule 4 CSOP scheme (see Schedule 4), (b) any right over or interest in shares obtained or acquired by the employee under a scheme mentioned in any of the preceding paragraphs, or (c) any shares acquired by the employee as a result of the exercise of a right over shares obtained before 27th November 1996, if the shares in question form part of the share capital of a company falling within section 701(3). (5) PAYE regulations may make provision excluding such other matters as may be described in the regulations from the scope of what constitutes enhancing the value of an asset for the purposes of this section.

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