HMRC has amended its Employment Procedures manual to reflect changes to tax equalised employee type arrangements.

Employers can agree under certain circumstance with their HMRC office to modify the operation of PAYE on the earnings of tax equalised employees coming from abroad to work in the UK.

There have been two recent changes that affect these arrangements:

1. New rules were introduced with effect from 6 April 2008 on how to tax the foreign income of people who are Resident but Not Ordinarily Resident in the UK, and/or Not domiciled in the UK and indicate to HMRC that they wish to be taxed on the remittance basis.
2. HMRC are introducing a new statutory employer form P46 (Expat).

The new form will come into use from 6 April 2009 and, where relevant, Expatriate employers must use this for all new starters not covered by an Appendix 4 (Short Term Business Visitor) agreement.

Full details of the changes effecting tax equalisation arrangement are available at http://www.hmrc.gov.uk/ebu/rev-paye-abroad.htm