Act now to avoid cash flow problems for you or your employees
Important changes to Section 690 directions
What is a Section 690 direction?
Section 690 of the Income Tax (Earnings and Pensions) Act 2003 allows employers to request a direction from HMRC to operate Pay As You Earn (PAYE) on a percentage of an employee's remuneration. This direction provides PAYE relief for employees who would ultimately be taxable on remuneration attributable to their UK workdays only.
By limiting the operation of PAYE so that it is calculated on income attributable to UK workdays only, employees and employers can better manage their cash flow, especially when withholding taxes are payable in another country.
What are the changes post-6 April 2025?
Currently, employers face long delays because they cannot operate PAYE in line with their application for the s690 direction until an HMRC officer reviews the application and issues a Section 690 direction letter. The new process will allow employers to operate PAYE on the income attributable to UK workdays as soon as HMRC acknowledges receipt of the application, which should be automated. This is a welcome change that should significantly improve the process.
However, it should also be noted that under the proposed amendments to the Finance Bill, all existing Section 690 directions will no longer be effective from 6 April 2025, which means replacement Section 690 directions will need to be applied for. This will all be done using a new application form, which HMRC have explained should become available from 6 April 2025
How Crowe Can Help
Crowe is committed to guiding you through these important changes and ensuring compliance with the new requirements. We can help determine the appropriate PAYE treatment for your employees, assist with the new application process and provide ongoing support to address any tax-related questions or issues. If you would like to discuss this further, please do not hesitate to contact Kenny Law or a member of your Crowe team.
