For the start of the new 2025/26 tax year section 690 ITEPA 2003 has undergone significant changes and a new process now applies to obtain a S690 agreement. This is aimed at providing relief from the strict application of PAYE and is relevant where the employer (or host employer) has a tax presence in the UK and the employee has at least one substantive UK workday.
This was process will allow employers and their agents to send HMRC a notification specifying a proportion of income paid to a globally mobile or treaty non-resident employee that will be treated as not being PAYE income. It is now actioned via an online notification form. Once HMRC acknowledges receipt of the notification employers can operate PAYE on the reduced amount of income straight away. It allows the employer to limit the application of PAYE to the proportion of the employee’s income that relates to work duties physically performed in the UK, avoiding the potential for double withholding tax.
HMRC expects employees subject to an S690 to complete a tax return and amend any estimate of the workday percentage to reflect the actual workdays during the year. It is also worth noting that the rules for national insurance are different and require independent consideration.
S690 agreements are used for employees who are;
- Globally mobile, working across multiple jurisdictions.
- Treaty non-residents, benefiting from tax treaties between the UK and other countries.
- Non-UK resident employees doing some work in the UK.
- UK residents who qualify for overseas workday relief.
For the form and further information from HMRC please click here.
