PAYE reporting for Short Term Business Visitors employed by overseas branches of UK Insurance companies

24 September 2024

When employees of overseas branches of UK insurance companies makes business trips to work in the UK, or otherwise host STBVs, in the first instance PAYE income tax should be applied to 100% of their earnings in real time.

Managing PAYE reporting for these employees in real-time places an administrative burden on employers as the employees’ pay data and UK day count details will not be available until month end. Additionally, given the limited amount of time these employees spend in the UK, if they are entitled to a personal allowance, it is unlikely that UK tax will be ultimately due on their earnings.

Many UK insurers will have overseas branches based in the US, EU and Bermuda in order to provide global coverage and support to their client base. As a result, any trips from these locations to the UK HQ will incur reporting obligations.

Given these difficulties, HMRC offers employers a special arrangement known as Appendix 8 that provides them with the following PAYE relaxations:

Annualised Payroll: Real-time reporting is relaxed and instead an Insurer can report the employees' earnings for the tax year in a single RTI Submission 1 month after the end of the tax year, giving the employer time to collate all relevant data. This also reduces the scope for filing errors and the risk of PAYE failure (and associated penalties).
Gross up Tax: Allows income to be grossed up at the employee’s marginal rate of tax if the employer is bearing the UK taxes due on the employee’s earnings.
Tax Return Requirement Discharged: The UK Tax return filing requirement for the employees included in the scheme is usually discharged if their earnings from this employment are their only UK source of income and gains.

Note, that once an employer obtains an Appendix 8 arrangement, it applies to future years if employers comply with the requirements under the arrangement.

Case study

We assisted a major UK insurance group in respect of visitors from their Bermudian branch. Real time PAYE reporting would ordinarily be difficult in such circumstances, but the travellers largely comprised senior staff members who received various complex streams of income (e.g. share based income, contingent bonuses etc). Understanding how to report these earnings on a real time basis would have been difficult for the company’s payroll department.

We advised the group to obtain an Appendix 8 arrangement and assisted them in obtaining this from HMRC.

On acceptance to the scheme, we made clear the relevant conditions and helped the Insurer collate the data to be reported to HMRC at year end and calculated the tax gross ups for them.

By calculating the grossed-up earnings to report at year end, we simplified payroll reporting for the company; this helped them avoid the administrative cost of the employees having to file UK Tax Returns to claim a repayment of tax where they were entitled to a personal allowance. Additionally, this mitigated the risk of PAYE failure, and the penalties and interest associated with this.

How can our global mobility team help?

Forvis Mazars provides a range of services to help employers in the financial services sector manage their regulatory compliance risks associated with hosting STBV employed by overseas branches. This includes:

Appendix 8 PAYE reporting and registration
Policy and process design and implementation
Home and host country payroll Employment tax and payroll compliance, including operating and managing global payrolls
Immigration support and planning

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