The Institute of Chartered Accountants in England and Wales (ICAEW) has reminded employers that, from 6 April 2025, employers with globally mobile or treaty non-resident staff can restrict Pay As You Earn to UK-sourced earnings as soon as they submit HMRC’s new online notification, without waiting for prior approval. The single form succeeds the section 690 direction, which has been withdrawn, and must be filed each tax year. Any determinations issued before 5 April 2025 automatically lapsed at year-end, so fresh notifications are required for 2025/26 and beyond.​

The digital service accepts agent access: supporting authorisations such as form 64-8 can be uploaded with the application. Once HMRC acknowledges receipt, payroll teams may apply the reduced withholding from the next pay run, although employees must still complete a self assessment return to reconcile their overall liability at year-end. Employers should build the annual renewal into their compliance calendar to avoid defaulting to 100 percent PAYE on international salaries.​

Overseas workdays relief re-engineered

The same legislative package remodels Overseas Workdays Relief (OWR) within the new foreign income & gains (FIG) regime that replaces domicile-based rules. OWR is now available for the first four consecutive years of UK residence, provided the individual was not UK-resident in the preceding ten tax years. The relief is capped at 30 percent of qualifying employment income or £300,000 a year.​

Unlike the previous system, earnings no longer need to be retained offshore to qualify for relief, unless the income relates to duties performed before 5 April 2025. Transitional measures preserve relief for employees who became UK-resident in 2023/24 or 2024/25, ensuring they are not disadvantaged by the timing of the reform.​

Action points for UK employers

Payroll and mobility policies should be updated promptly to reflect the new processes. In particular:

• Audit eligible population: Identify staff who will meet the non-resident, split-year or OWR criteria for 2025/26.
• File notifications early: The form can be submitted as soon as residence status and UK duty proportion are known, allowing immediate payroll adjustment.
• Align payroll software: Ensure systems can apply a UK-only earnings percentage and record the notification reference.
• Refresh employee communication: Highlight continued Self Assessment obligations and outline how the OWR cap works.
• Monitor year-on-year changes: Revisit the percentage if travel patterns alter and re-notify HMRC where necessary.

Taking these steps should minimise over-withholding, optimise cashflow for internationally mobile staff and demonstrate reasonable care if HMRC reviews the arrangements. Employers who have operated section 690 directions in the past must migrate to the notification model or risk full PAYE on global earnings. Early engagement with advisers is recommended where complex treaty or split-year cases arise.

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