Sep 7
A single substantive workday in the UK can be enough to bring part of an overseas employee’s earnings within the UK Income Tax and PAYE rules. That does not automatically mean every overseas employer must set up a UK payroll from day one: PAYE depends partly on whether the employer has a sufficient UK tax presence and, where it does not, whether responsibility falls on the UK entity for which the employee is working.
HMRC’s new short-term business visitor guidance, published on 13 August 2026, makes the practical point clear. Employers should not assume that a visit is outside PAYE simply because it lasts only a few days. Appendix 4 and Appendix 8 provide ways of simplifying the position in qualifying cases, but both are formal arrangements that must be agreed with HMRC and properly administered.
For a non-UK resident employee, earnings relating to duties actually performed in the UK are generally within the scope of UK Income Tax, subject to special rules such as those for duties that are merely incidental to an overseas employment. A double taxation agreement may ultimately remove the UK liability if the treaty conditions are satisfied, but treaty relief does not apply automatically and does not mean employers can simply ignore PAYE.
This is particularly relevant to groups moving staff between a UK company and an Irish subsidiary. Under the UK-Ireland tax treaty, employment income for duties performed in the UK can remain taxable only in Ireland where the relevant conditions are met, including the employee being present in the UK for no more than 183 days in the UK fiscal year, remuneration not being paid by or on behalf of a UK employer, and the remuneration not being borne by a UK permanent establishment or fixed base.
| Feature | Appendix 4 | Appendix 8 |
|---|---|---|
| Who it covers | Qualifying employees resident in a country with an applicable UK double taxation agreement | Short-term visitors who cannot be included under Appendix 4, including some visitors from non-treaty countries and employees of overseas branches of UK companies |
| Effect | Allows PAYE to be disregarded where the treaty and arrangement conditions are met, with annual reporting to HMRC | Allows UK PAYE to be calculated, reported and paid through an annual RTI submission rather than normal real-time payroll |
| Day limit | Employee generally expected to remain within the treaty’s 183-day condition; the precise measuring period depends on the treaty | Maximum 60 UK workdays in the tax year |
| Money changing hands | Normally no PAYE deduction where treaty relief applies and all conditions remain satisfied | Actual UK PAYE liability is calculated and paid through the annual arrangement |
| Annual deadline | Annual Appendix 4 reporting generally due by 31 May following the tax year | RTI return and tax payment due by 31 May following the tax year |
| Where it breaks down | Treaty conditions fail, the UK entity is treated as the employer or ultimately bears remuneration outside the available relation | More than 60 qualifying UK workdays, a NIC liability arises or another eligibility condition is not met |
Appendix 8 cannot be used for a visitor who qualifies for Appendix 4, and it does not cover someone with a UK National Insurance contributions liability. Non-resident directors carrying out UK director duties for a UK company cannot be included in either arrangement for those duties.
Appendix 4 requires close attention to who really bears the employee’s remuneration and, where relevant, which entity is the economic employer. HMRC does not look only at the company named on the employment contract or payslip. It considers factors including who benefits from the work, who bears the risks, who supervises or controls the duties and who ultimately bears the remuneration.
That makes the way intercompany charges between UK and Irish companies are structured important. A recharge of employment costs can be relevant evidence that the UK entity bears the cost, but a recharge by itself does not determine the economic-employer question. The facts of the working arrangement and the wording of the relevant treaty also matter.
There is an important 60-day relaxation. Employees resident in a treaty country who remain on a non-UK payroll may generally be treated as employed by the overseas employer where they are present in the UK for fewer than 60 days and that period is not part of a longer actual or anticipated period of UK presence. In those circumstances, the relaxation can apply even where remuneration costs are borne by a UK entity.
The first distinction to make is between presence days and workdays.
For the 183-day treaty test used by Appendix 4, HMRC follows the physical-presence approach. Any part of a day in the UK normally counts, including arrival and departure days, weekends, holidays and sick days spent here. Transit between two non-UK destinations can be treated differently. The precise period over which the 183 days are measured depends on the relevant treaty.
Appendix 8 uses a different test. Its 60-day limit refers to UK workdays in the tax year, and incidental duties do not normally count. Employers therefore need records showing both how many days an employee was physically present in the UK and which of those days were UK workdays.
HMRC’s 2026 guidance specifically identifies poor tracking, failure to count all treaty days, misunderstood recharges and misunderstanding the 60-day rule as common employer errors. Records should include days spent in the UK, workdays and supporting travel information.
Take a Dublin-based engineering group whose technical director regularly travels to a Belfast group company to oversee a joint contract. If the employee spends five days in Belfast every month, that is around 60 days of physical presence a year before any weekends or longer visits are added.
That may remain comfortably below the 183-day limit in Article 15 of the UK-Ireland treaty, but the 60-day economic-employer relaxation requires presence of fewer than 60 days and therefore cannot simply be assumed to apply. The group must then look carefully at who supervises the director’s UK work, who benefits from it and who ultimately bears the related remuneration.
If the Belfast company is effectively directing and controlling the work, that can affect whether treaty relief and Appendix 4 remain available. The analysis should be made before repeated travel becomes an established pattern rather than after HMRC raises questions.
Short-term visitor compliance sits alongside, but separately from, cross-border payroll for UK and Irish operations. A payroll process for permanently based employees does not automatically deal with occasional overseas visitors, and the two should be reviewed separately.
Our cross-border accounting and tax specialists can build short-term business visitor tracking into the wider payroll and tax process when a group is setting up operations in both the UK and Ireland. Creating the process at the outset is considerably easier than reconstructing years of travel afterwards.
Where visits have taken place without adequate records and HMRC opens an enquiry, the position is similar to what your finance team should do first when a compliance check opens: organise the records promptly, establish the facts and respond accurately.
If historic employment costs, recharges or supporting records need to be reconstructed, our forensic accounting team can help establish what was actually recorded and where discrepancies arose.
HMRC’s own detail on these arrangements is set out in its PAYE manual guidance on short-term business visitors, alongside its August 2026 short-term business visitor compliance guidance.
If your business regularly sends employees across the Irish Sea, even for only a few days at a time, talk to SCC Chartered Accountants about whether your current arrangements meet the relevant PAYE, treaty and reporting requirements.
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