Income Tax (Earnings and Pensions) Act 2003

689 Employee of non-UK employer U.K.

(1) This section applies if—

(a) an employee during any period works for a person (“the relevant person”) who is not the employer of the employee,

(b) any payment of, or on account of, PAYE income of the employee in respect of that period is made by a person who is the employer or an intermediary of the employer or of the relevant person,

(c) PAYE regulations do not apply to the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer, and

(d) income tax [F1 and any relevant debts are] not deducted, or not accounted for, in accordance with the regulations by the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer.

[F2 (1ZA) But this section does not apply if section 689A applies or would apply but for a certificate issued under regulations made under subsection (7) of that section.]

[F3 (1A) Subject to subsection (4), subsection (1)(b) does not apply in relation to a payment so far as the sum paid is employment income under Chapter 2 of Part 7A.]

[F4 (1B) Subsection (1C) applies if—

(a) the employee worked for the relevant person during the period under or in consequence of arrangements made between the relevant person and a third person,

(b) the third person did not make the payment of, or on account of, PAYE income of the employee, and

(c) PAYE regulations would apply to the third person if the third person were to make a payment of, or on account of, PAYE income of the employee.

(1C) The third person is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the employee of an amount equal to the amount given by subsection (3).]

(2) [F5 If subsection (1C) does not apply, the] relevant person is to be treated, for the purposes of PAYE regulations, as making a payment of PAYE income of the employee of an amount equal to the amount given by subsection (3).

(3) The amount referred to is—

(a) if the amount of the payment actually made is an amount to which the recipient is entitled after deduction of income tax [F6 and any relevant debts due under the PAYE regulations] , the aggregate of the amount of the payment and the amount of any income tax [F7 and any relevant debts deductible] due, and

(b) in any other case, the amount of the payment.

(4) If, by virtue of any of sections [F8 687A and] 693 to 700, an employer would be treated for the purposes of PAYE regulations (if they applied to the employer) as making a payment of any amount to an employee, [F9 and if the case is not within subsection (4A),] this section has effect as if—

(a) the employer were also to be treated for the purposes of this section as making an actual payment of that amount, and

(b) paragraph (a) of subsection (3) were omitted.

[F10 (4A) A case is within this subsection if—

(a) the section concerned is section 687A or 695A (employment income under Part 7A), and

(b) the relevant step concerned is within paragraph 1 of Schedule 11 to F(No. 2)A 2017 (loans etc outstanding on 5 April 2019).

(And this section does not apply in a case within this subsection.)]

(5) For the purposes of this section a payment of, or on account of, PAYE income of an employee is made by an intermediary of the employer or of the relevant person if it is made—

(a) by a person acting on behalf of the employer or the relevant person and at the expense of the employer or the relevant person or a person connected with the employer or the relevant person, or

(b) by trustees holding property for any persons who include or class of persons which includes the employee.

(6) In this section and sections 690 and 691 “work”, in relation to an employee, means the performance of any duties of the employment of the employee and any reference to the employee’s working is to be read accordingly.

Textual Amendments

F1 Words in s. 689(1)(d) substituted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(7)(a)

F2 S. 689(1ZA) inserted (6.4.2014) by Finance Act 2014 (c. 26), s. 21(4)(10)

F3 S. 689(1A) inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 30(2)

F4 S. 689(1B)(1C) inserted (6.4.2014) by Finance Act 2014 (c. 26), s. 20(2)(4)

F5 Words in s. 689(2) substituted (6.4.2014) by Finance Act 2014 (c. 26), s. 20(3)(4)

F6 Words in s. 689(3)(a) inserted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(7)(b)(i)

F7 Words in s. 689(3)(a) inserted (20.7.2011) by The Finance Act 2009 (Consequential Amendments) Order 2011 (S.I. 2011/1583), arts. 1, 2(7)(b)(ii)

F8 Words in s. 689(4) inserted (with effect in accordance with Sch. 2 paras. 52-59 of the amending Act) by Finance Act 2011 (c. 11), Sch. 2 para. 30(3)

F9 Words in s. 689(4) inserted (15.3.2018) by Finance Act 2018 (c. 3), Sch. 1 para. 12(2)

F10 S. 689(4A) inserted (15.3.2018) by Finance Act 2018 (c. 3), Sch. 1 para. 12(3)