6 November 2017
Increasingly within global organisations we see that individuals have increasing international activity throughout a business’ empire with differing national fiscal obligations. Impact on employees and compliance with a variety of national fiscal government obligations brings into play significant complexities. Some will be available within Payroll Software or service, whereas others, a little more obscure, may require special handling. For UK Payroll, there are a variety of variants (to the normal) Pay As You Earn (PAYE) obligations.
Where an employee works both in the UK and overseas, and certain UK non-residence criteria are met, an employee can apply to UK HM Revenue & Customs (HMRC) to operate PAYE only on the proportion of the earnings that relates to their UK work. This applies to all payments made by the UK employer (including termination payments and share based remuneration). HMRC issue a S.690 notice specifying the proportion (as a percentage value) that is to be treated as UK Income.
The employee’s earnings are split between the amount subject to UK PAYE and amount which is not. Only the UK part is added to taxable gross pay, and be subject to the standard UK tax calculation.
Often the S.690 notice is provided midway through the tax year; however, it applies to the full tax year. Therefore, an employer may need to adjust payments for prior periods affected in that tax year. How an employer refunds prior amounts of tax is dependent on whether the tax code is being operated on a cumulative or non-cumulative basis. For those on a cumulative tax basis, then by adjusting the taxable gross year to date total and setting the correct calculation proportion going forward will take care of any tax refunds for overpayments due. For week 1 / month 1 cases, then prior period overpayments would require manual calculation and update to bring records back into the correct position.
Ongoing where the amount of pay is split between taxable and non-taxable, then the correct accumulation of both taxable gross and tax paid will occur.
Please note that S.690 has no impact on the National Insurance application.
For Short Term Business Visitors then HMRC operate Appendix 4. By complying with set criteria, an employer can disregard PAYE for short term business visitors to the UK. This arrangement can only be applied where the individual meets the following:
With Appendix 4 there is no in-year Full Payment Submission (FPS) reporting to HMRC, however, at tax year end, the employer must report the taxable gross and any tax paid on an FPS. When this is applied to a UK payroll, then a new record is required for each tax year with the employment start date marked as the first day they started working in the UK for that tax year, and a leave date of 5th April (the last day of the tax year). No National Insurance liability or secondary employer liability apply for Apprenticeship levy.
Net of foreign tax relief applies where an employer is required to deduct both foreign tax as well as UK PAYE from salaries of individuals who have dual taxation obligations on their employment income by providing provisional tax relief for double taxation. Employers must contact HMRC to obtain agreement to operate Appendix 5 and notify any subsequent changes in circumstance that would affect the status. The UK PAYE is calculated on the taxable gross earnings using the relevant tax code and tax basis, and then that amount of tax due is reduced by any foreign tax due on the same payment to a value no lower than zero. The regular FPS submission to HMRC reports the full taxable pay and the reduced tax amount.
Tax equalisation generally describes arrangement between and employer and their foreign national employees who has come to the UK to work. Under the terms of the agreement, the employee is entitled to a specified Net Pay. The employer agreed to meet the UK tax liability and ensure that their employees UK affairs are handled by a professional adviser or specialist.
There are several ways to operate: the first method is to operate PAYE on a gross-up of cash earnings and non-cash benefits within the payroll (good software and service offer options to undertake net to gross); and the second for the payroll to be informed of the values to be overwritten and notified by a third-party external to the payroll (such as accountancy professional adviser).
Modified NI arrangements may apply for those:
Operation is similar to Appendix 6 and 7a (such as predetermined values).
Along with these official HMRC methods of operating UK PAYE and fulfilling RTI filing obligations, with an increasing mobile workforce coming into the
UK or working overseas, then there are other non-standard arrangements required for those who are not subject to UK PAYE, or for other hybrid types
schemes often serviced via accountancy firms.
These specialist PAYE operational requirements will not be present in all payroll software and service, if and when they apply it is important to ensure that your provision is both compliant with the calculation requirements, and any associated HMRC reporting obligations.
We’ll help you make sense of the government’s advice on Statutory Sick Pay and taking care of your employees during COVID-19.24 March 2020
There have been many publications about the Good Work Plan over the past 18 months and it can be confusing to work through complex, legislative documentation to understand how you stay compliant. While the good work plan covers many topics, this blog aims to take you through one aspect of this, Holiday Pay, and asks the simple question – are you ready for the changes?29 October 2019
Autonomous Vehicles And Smart Warehouses Are So Last Year – 2018 Is All About Digitising Your HR Function.
Hear from our CEO Steven Van Hoorebeke during an interview with The Business Debate.18 April 2018
If you want to learn best practice in handling data in light of the General Data Protection Regulations (GDPR), you can do no better than to look at DuPont. Now part of science giant DowDuPont following a merger last year, data is part of the DNA of the organisation and it has a long history of embedding data protection into its culture.8 March 2018
On Tuesday 6th February, at Hilton Park Lane in London, we were delighted to join our partner SD Worx at its European Conference 2018.The theme for the day was close to our heart: ‘The Future of Collaboration’. This unique event played host to the industry's most influential experts, practitioners and businesses, attracting leading HR and payroll professionals from all over the world.5 March 2018
Here are the top five lessons on implementing GDPR from the session with Gert Beeckmans, Chief Risk and Security Officer at SD Worx, and Frank Rudolf, Director of Payroll at PAREXEL from the SD Worx European Conference 2018, held in London on 6th February.2 March 2018
With just three months to go until the General Data Protection Regulation (GDPR) comes into force, the clock is ticking for HR and payroll managers to get the systems and processes in place to ensure compliance. The regulation, coming into effect on 25 May 2018, updates data rights for today’s networked world, and organisations ignore it at their peril.1 March 2018
Clark Hoy, Business Development Manager at SD Worx UK & Ireland shares his top tips for all the new dads and dads to be (D2B) regarding all things paternity!26 February 2018
Globalisation is a word synonymous with the rise of industry. However, recently we may have heard it thrown around a boardroom alongside the other generic buzzwords, and as such something about it becomes disjointed and bereft of purpose. In reality, globalisation is a powerful force – something that should be cultivated and respected in the corporate world.18 December 2017
Retention of the personal data is ‘lawful basis’ where it is necessary, for compliance with a legal obligation, for the exercise or defence of legal claims. For Payroll and HR reasons, employers must hold and retain personal information about their employees and former employees to meet these legal requirements.4 December 2017
GDPR is set to see the biggest shake-up in the way we handle data since the Data Protection Act of 1998. Over the last few years, the processing and control of data has seen many systematic changes. Updated legal obligations set out in the Regulation such as the ‘lawful basis’ of the processing of data is sure to see more changes to data handling.27 November 2017
Read Simon Parson's latest blog where he answers the frequently asked question: 'Do you know if HMRC are likely to want us to include more options for employees that may be transitioning or don’t identify themselves with either gender?'23 November 2017
Effective from 1st January 2019, The Irish Revenue Commissioners (or Revenue) are set to introduce the biggest change to PAYE reporting since 1944, in the form of PAYE Modernisation / Real Time Reporting (RTR).6 November 2017
The topic of a managing global payroll systems has been voiced by many thoughts leaders in the industry. In our previous blog, Doug Sawers, Managing Director of SD Worx UK & Ireland went into detail on the matter. This week, we sat down with David Munn, Director of Global Payroll Services, where he shares his views.30 October 2017
The EU’s General Data Protection Regulation (GDPR) comes into effect on 25 May 2018. It applies to any organisation that processes the personal data of
EU citizens regardless of where they are situated. Brexit won’t let UK companies off the hook as the government has announced that the legislation
will be brought into UK law.
9 October 2017
In order to get to understand Alabaster, we recommend that you know a little about the case precedent behind it.2 October 2017
Our Head of Legal, Leon Daniel, has written some useful information on GDPR and what it might mean for your organisation. This is the second of a series of articles on the steps we are taking at SD Worx to ensure GDPR compliance.14 August 2017
Our Head of Legal, Leon Daniel, has written some useful information on General Data Protection Regulation (GDPR) and what it might mean for your organisation. This is the first of a series of articles on the new Regulation and will cover the steps we are taking at SD Worx to ensure GDPR compliance.7 August 2017
Part two of our blog, our Commercial Director John Cusack and Business Development Manager Steve Knapman, built upon the information outlined by Mercer in part 1 – and discuss how SD Worx’s analysis tools can provide you with in-depth statistics on the gender pay gap. Read more on some of the useful points that we took away from the webinar...10 July 2017
Minimum pay is governed by employment law, and breach is criminal; HM Revenue & Customs are charged with policing its application based on a number of significant factors and structures. In this blog, our Director of Payment, Benefits & Compliance Strategies, Simon Parsons, discusses critical touch points for compliance and recent payroll error examples regarding this legal requirment.3 July 2017
The gender pay gap has been a hot topic for years, dominating discussion in the media and in boardrooms. Seemingly refusing to close, the gap stood at 9.4% in 2016, down from 17.4% in 1997. While the UK is getting nearer and nearer to gender parity in pay, figures suggest it still has a long way to go...19 June 2017
2017 is going to be both interesting & challenging. With Brexit and changing government leadership much is to be done and quickly. Now is the time for the business to come together and plan for change...2 March 2017
Payroll is a standard pillar that all businesses need to get right in order to avoid inefficiency and increased costs. Despite this, many organisations are still working with outdated and ineffective payroll systems that eat into valuable HR time, and business profit. So if you’re a payroll or HR professional with a plan to streamline costs and processes in 2017 but don’t know where to begin, here are four key things to help you get the New Year off to a good start...28 November 2016
In August 2016, HMRC launched a ‘Consultation on salary sacrifice for the provision of benefits in kind’. The indication is to bring in law changes from April 2017.11 October 2016
Often once the deal is done you can’t see the lawyers for dust, so if you receive notice from a supplier or customer that they have been acquired, or if you have been acquired yourself, what do you need to do to keep your current contracts in order?3 October 2016
The way the government funds apprenticeships in England is changing. The 6th April 2017 sees the introduction of a new employment tax on United Kingdom employers. Scotland Wales and Northern Ireland, each having their share of the levy, will have to decide how apprenticeship spending will take place. In this blog I cover some key points that employers should be considering in order to prepare for the upcoming changes...5 September 2016
As a union, the UK has voted to leave the European Union with some Scottish politicians hinting of a further independence referendum, and some in Northern Ireland wanting a joint Irish nation! At the same time, Job Centre Plus has run out of National Insurance numbers and in June 2016, decided in to start issuing NINOs with prefix ‘KC’ - but there is an issue with this...15 August 2016
With the result of the UK referendum to leave the European Union and indication by Scotland's first minister to run a further Devolution referendum, Simon Parsons considers the potential implications for the next few years for Scotland and Payroll services...8 August 2016
So the nation has chosen to progress leaving the EU with a popular vote of 52%. So what's changed, apart from volatility in currency and stock markets? And what major action do we see impacting payroll?26 July 2016
The National Living Wage (NLW) became compulsory for employees aged 25 and above, at a new minimum rate... Have you considered the implications and reviewed your maternity leave payments and made top-ups of SMP?27 June 2016
April 2016 saw some of the most significant legal changes to impact payroll operations and software. I would venture that this year’s new changes have been some of the most impactful yet, more so than the introduction of Real Time Information (RTI). New requirements for Scotland including the Scottish Rate of Income Tax and changes to Earnings and Maintenance Arrestments. A revolution in national insurance with the removal of Contracting out and Under 25 Apprentice NICs being introduced. The list can go on.13 June 2016
Following the judgement of the Employment Appeal Tribunal (9th March 2016), the question of salary sacrifice and maternity rights has been thrown into question! Was HMRC errant in providing guidance? Are employers now off the hook with provision of non-cash benefits in kind during maternity?16 May 2016
In the 2015 Queens speech, the Government set out to create 3 million new apprenticeships by 2020. As part of the Enterprise Bill, apprenticeships would gain the same legal treatment of degrees. ‘The Richard Review’ brings new standards being developed by ‘trailblazers’ and new funding trialled giving employers greater control over spend on training delivery.11 April 2016
We thought 2013 was busy with the introduction of Real Time Information, but looking back it now seems a doddle! 2016 is proving to be one of the most substantial change years ever for payroll, software and service providers and especially payroll managers. Never before have I seen such a wide, heavy plethora of change. Now seems a good time to start the preparations in earnest and put the brain in gear...25 January 2016