An overseas employee who works in the UK is taxable on the UK duties, and a UK company hosting them may have to run PAYE. Where the employment article of a double taxation treaty is likely to exempt the pay, HMRC lets the UK employer disregard PAYE under an EP Appendix 4 agreement, provided the visitor stays 183 days or less and the cost is not ultimately borne in the UK. Visitors who fall outside that, but work no more than 60 UK workdays a year, can be reported once a year under Appendix 8.

Why does PAYE arise on a business visit at all?

A non resident employee is chargeable under section 27 ITEPA 2003 on general earnings for duties performed in the UK (EIM40201). HMRC’s employer guide CWG2 for 2026 to 2027 says PAYE must be operated for employees working at a UK branch of an overseas employer, or working under the day to day control and management of a UK business, including directors, and that the UK business must operate PAYE as if it were the employer whether the pay comes from the UK, from abroad or both.

PAYE81630 confirms the starting point: where a short term business visitor is employed by, paid by or working for a UK company, PAYE is operated in the usual way. The relaxations described below only apply where a treaty claim is likely to succeed and the employer has an agreement with HMRC. HMRC says employers must have an agreement in place to apply the relaxations from 6 April 2013.

What does the treaty employment article require?

Most UK treaties follow Article 15 of the OECD Model. CWG2 summarises the usual test: UK tax is not paid if the employee is present in the UK for no more than 183 days in aggregate in the relevant year, the pay is paid by or on behalf of an employer that is not UK resident, and the pay is not borne by a permanent establishment the employer has in the UK. The visitor must also be resident in the treaty partner country for treaty purposes.

The 183 day test

DT1921 explains that treaties use two formulas. Most use the tax or fiscal year, but some, including those with Norway, Belgium, Denmark, France and Sweden, use any 12 month period, which is much harder to meet on a long assignment. Days are counted by physical presence: any part of a day counts, as do arrival and departure days, weekends, holidays and sick days. Days in transit between two non UK points are excluded, and so are days when the person was UK resident.

The employer test

Remaining on a foreign contract is not enough. DT1922 says HMRC will reject a claim where the employee is seconded to a UK company that functions as the employer in practice and bears the cost of the pay, whether by a direct recharge or through a management charge. As a practical concession, a UK company with which the employee has no formal contract is not treated as the employer where the employee is in the UK for less than 60 days in a tax year and that is not part of a longer period of presence.

The permanent establishment test

Where an overseas company operates in the UK through a branch rather than a subsidiary, DT1923 says the branch is assumed to bear the cost of a seconded employee unless there is evidence that head office pays and the cost is not allocated to the UK. Our guide to a permanent establishment for overseas companies explains when a branch exists.

What is an EP Appendix 4 agreement?

EP Appendix 4, reproduced at PAYE82000, is a standard agreement between HMRC and the UK employer allowing PAYE to be disregarded for visitors who are resident in a treaty country, are coming to work for a UK company or the UK branch of an overseas company, and are expected to stay 183 days or less in any 12 months. For named employees present for 60 days or more, the employer must show that the UK company or branch will not ultimately bear the remuneration. “Ultimately borne” means after all recharging of any kind, and remuneration includes salary, benefits, allowances and expenses.

The employer must run an internal system for recording UK visits, and employees should not spend more than 30 days intermittently in the UK in any 12 months without reporting to the central point. Records fall within regulation 97 of the PAYE Regulations and must be kept and produced on request. No Full Payment Submission is needed for Appendix 4 employees. If an employee later turns out to be liable, the employer must pay the tax that should have been deducted, with interest, and HMRC can insist on strict PAYE for everyone from day one if the criteria are not being followed. If only one or two employees are affected, HMRC suggests individual NT codes instead.

What has to be reported, by length of visit?

Days in UK in the tax year What Appendix 4 requires
1 to 30 (within the 60 day rule) Nothing, unless part of a longer period of 60 days or more
31 to 59 (within the 60 day rule) Confirm there is no formal UK employment contract and the days are not part of a longer period
Up to 90 (others) By 31 May after the tax year: name, last UK and overseas addresses, duties, start and end dates, country where worldwide income is returned, and confirmation that the UK company does not bear the cost or act as employer
91 to 150 As above, plus a statement from the overseas tax authority confirming residence, by 31 May after the end of the overseas tax year (US citizens and Green Card holders need only evidence of continuing US residence)
151 to 183 A named application as soon as more than 150 days can be anticipated, with a statement from the employee explaining why they are treaty resident abroad

For the last band HMRC decides whether to include the employee in the arrangement, authorise code NT with a Self Assessment return, or require PAYE with a return.

What if the visitor fails the treaty test?

EP Appendix 8, made under regulation 141 of the PAYE Regulations, covers visitors who are taxable in the UK, including those from overseas branches and from countries with no treaty, provided their UK workdays in the tax year total 60 or fewer. A UK workday is a day or part day of UK duties, excluding days of merely incidental duties. HMRC sets up an annual PAYE scheme and the employer reports all payments, including those made by the home employer, on one return by 31 May after the tax year. Tax is worked out at month 12 using personal allowances where due, and must be paid by 31 May if paid electronically, or by 28 May otherwise.

Benefits do not go on a P11D but their cash equivalent is included in the month 12 calculation, grossed up if the employer bears the tax. A nil return is required if nobody qualifies, and only one Appendix 8 scheme is allowed per UK company or branch. HMRC says the 60 day limit will not be relaxed, and visitors over it must go on the normal payroll. Non resident directors of the UK company cannot be included, and neither can anyone with a Class 1 National Insurance liability.

Worked example

Illustration only. A UK subsidiary with an Appendix 4 agreement receives two engineers from its overseas parent, both resident in a treaty country that uses the tax year test. Amira makes three trips totalling 45 days in 2026 to 2027, has no UK contract, is paid on the parent’s payroll and has not been here before or since. She sits in the 31 to 59 day band: the employer confirms no formal UK contract and no longer period, and no PAYE is operated.

Ben spends 100 days at the subsidiary and the parent recharges his salary to it. He is present for 60 days or more and the UK company ultimately bears his pay, so he falls outside Appendix 4. PAYE must be run on his UK earnings, and DT1922 suggests his treaty claim would also fail if the subsidiary functions as his employer.

Does any of this cover National Insurance?

No. Appendix 4 points to CWG2 for National Insurance, and Appendix 8 excludes anyone with a Class 1 liability. CWG2 explains that for an employee from a country without a social security agreement, sent temporarily by an overseas employer with a place of business abroad, contributions are not payable for the first 52 weeks starting from the first Sunday after arrival.

What mistakes do employers make?

  • Counting working days instead of days of physical presence for the 183 day test.
  • Ignoring recharges and management charges that move the cost to the UK.
  • Overlooking benefits such as accommodation paid by the UK company, which DT1922 says are not paid on behalf of the overseas employer unless recharged and so are not covered by the exemption. See our guide to benefits in kind and P11D.
  • Treating visiting board members as business visitors. INTM153180 explains that the directors’ fees article removes the short visit exemption; see non resident directors and PAYE.
  • Applying the relaxations without a signed agreement, or without the visit records HMRC will ask for in an employer compliance check.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.