Paragraph 2 Notifications in respect of treaty non-resident employees

United Kingdom

(1)

Section 690D (employer notification for qualifying new residents) is amended as follows.

(2)

At the end of the heading insert “or treaty non-residents”.

(3)

In subsection (1)—

(a)

in paragraph (a), for “qualifying”, in the second place it occurs, substitute “notifiable”;

(b)

in paragraph (b), for “qualifying” substitute “notifiable”.

(4)

After subsection (1) insert—

“(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.”

(5)

In subsection (2)—

(a)

in the opening words—

(i)

for “The” substitute “If this section applies in relation to the employee by virtue of subsection (1), the”;

(ii)

for “qualifying” substitute “notifiable”;

(b)

at the end of paragraph (b) insert “(but see subsections (5A) and (5B))”.

(6)

After subsection (2) insert—

“(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)).”

(7)

In subsection (3), after paragraph (b) insert—

“(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.”

(8)

In subsection (4), after “qualifying payment” insert “or treaty affected payment (as applicable)”.

(9)

After subsection (5) insert—

“(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.”

(10)

In subsection (5)(a)—

(a)

after “qualifying new residents” insert “or treaty non-residents”;

(b)

for “qualifying year” substitute “notifiable year”.

(11)

In subsection (6)—

(a)

in paragraph (a), for “qualifying” substitute “notifiable”;

(b)

for paragraph (b) substitute—

“(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)

in paragraph (c)(i), for “qualifying” substitute “notifiable”.

(12)

In subsection (9)—

(a)

omit the “and” at the end of paragraph (a);

(b)

at the end of paragraph (b) insert—

“(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.”