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Treasury considers PAYE changes for short visits to UK

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As part of its renewed strategy for the asset management industry, the government is considering changes to the so-called ‘EP appendix 4’ arrangements, under which UK employers need not operate PAYE for foreign employees on short stays at UK branches. This relaxation does not currently apply to visits to the UK by employees from foreign branches of UK companies, which is of particular concern to asset management firms.

The asset management industry has been lobbying the government about HMRC’s ‘EP appendix 4’ PAYE relaxation for short-term business visitors to the UK, set out in PAYE82000, which applies to employees from foreign firms with branches in the UK, but not to employees from foreign branches of UK-based firms when they visit the UK.

The government appears to be listening to the industry’s concerns. HM Treasury’s ‘Investment Management Strategy II’ document, published on 6 December, states that the government, ‘understands industry views on the burden that these rules create’. The document goes on to say that the government will decide in the Spring whether to consult on a change to these rules.

In a speech to TheCityUK, the financial industry representative body, on 5 December, the chancellor said the government: ‘will consult in due course on how we can improve the tax treatment of short-term business visitors from foreign branches’.

The PAYE relaxation is subject to the employees in question being present in the UK for a period of less than 60 days. It includes foreign employees covered by a double taxation agreement, as well as those whose ‘remuneration costs are borne by the UK branch or permanent establishment of a foreign employer’. It does not apply to individuals ‘employed by a UK resident employer including an overseas branch of a UK-resident employer’.