PAYE

Where an employee works both in and outside of the UK, it is possible for the employer to apply to HMRC for a direction to only operate PAYE on the UK proportion of the employee’s earnings.  

Up to 5 April 2025, this was known as a section 690 application and HMRC approval was required before the employer could operate the reduced withholding. From 6 April 2025, the employer can operate reduced withholding as soon as they submit a notification and HMRC acknowledge receipt. 

The employee is still required to submit a self-assessment tax return to determine the final position at the end of the tax year. 

Due to the change in legislation, all existing determinations are no longer valid and new notifications for tax year 2025/26 must be submitted. HMRC’s new application form has been available online since 6 April 2025 and allows an agent to upload an authorisation form as part of the application process. A notification is only valid for a single tax year so must be renewed each year an employee is eligible.

Overseas workdays relief  

This is relief on earnings relating to overseas employment duties where certain conditions are met.   

Despite the abolition of domicile status for tax purposes from 6 April 2025, some globally mobile employees will still be, or will become entitled to overseas workdays relief under the new foreign income and gains (FIG) regime. Other taxpayers may no longer meet the eligibility criteria for the relief.   

There are some significant differences between the FIG regime and the previous regime that existed in conjunction with the remittance basis and non-domiciled taxpayer (non-dom) status. These include the following:  

• Overseas workdays relief under the FIG regime is available for first four years of UK tax residence rather than the year of arrival plus the following two tax years.
• New residence criteria applies, meaning that an employee must be a qualifying new resident for the tax year in question and not UK resident in any of the 10 tax years immediately preceding that year.
• Under the new regime, there is no requirement to pay the earnings outside the UK, or for the employee to retain this income outside the UK, in order to benefit from the tax relief, unless any of the income relates to a period ending before 5 April 2025.
• Overseas workday relief is now capped at the lower of 30% of qualifying employment income and £300,000 per tax year.  

Transitional measures are in force for those who became UK tax resident in 2023-24 or 2024-25 and qualified for overseas workdays relief. 

Further information 

• April 2025 issue of the Employer Bulletin - GOV.UK