PAYE81512 | PAYE operation: international employments: section 690 ITEPA 2003 prior to 6 April 2025

Section 690 ITEPA 2003

The legislation at section 690 was substituted from 6 April 2025.

For tax years ending prior to 6 April 2025, section 690 applied in relation to an employee if during a tax year the employee worked, or was likely to work, both in and outside the UK and either

• was non-UK resident for that tax year,

• was UK resident for that tax year and the year was, or was likely to be, a split year in relation to the employee, or

• was UK resident for that tax year and met the requirement of section 26A in that tax year, so that they were eligible for Overseas Workday Relief (see the Employment Income Manual (EIM) EIM40103 for further guidance on the requirement of section 26A).

UK residence is determined by reference to the Statutory Residence Test. For more information, please go to HMRC manual RFIG20000.

Where section 690 ITEPA 2003 applied to an employee in a tax year, an employer could apply to HMRC for a direction allowing them to treat only a proportion of any income paid to that employee as being PAYE income.

If no direction was issued, then the total amount paid to the employee was treated as PAYE income.

By concession, HMRC also allowed employers of employees who were treaty non-resident for a tax year to apply for a direction to allow them to operate PAYE only on the percentage of the employee’s income that related to work done in the UK.

For tax years ending prior to 6 April 2025, when making an application for a direction, HMRC would allow an employer to request a direction covering a period of up to three tax years.

Any HMRC direction issued under section 690 ITEPA 2003 has no effect in relation to tax year 2025 to 2026 or any subsequent tax year.