Essential Checks for Employers to Ensure Accurate UK Tax Reporting for Expats For the 2025/26 Tax Year End

The countdown to April 5th is always a high-pressure sprint for payroll and HR teams, but when you throw expatriate tax into the mix, it becomes a marathon through a minefield. With the massive overhaul to the UK’s non-dom rules that took effect at the start of this 2025/26 tax year, this particular year-end requires extra vigilance.

With just over two weeks to go, here is the factual, grounded reality of exactly what you need to check right now to ensure HMRC compliance, avoid penalties, and maximize allowable deductions for your globally mobile employees.

1. The Big Shift: Overseas Workday Relief (OWR)

The 2025/26 tax year saw the abolition of the remittance basis and the introduction of the 4-year Foreign Income and Gains (FIG) regime. This completely changed how OWR is processed.

• Renew your PAYE online notifications: The old "Section 690" directions were replaced on April 6, 2025, by a new annual online notification system for operating modified PAYE on partial UK duties. Unlike the old system, this must be renewed every single tax year. You need to submit your 2026/27 notification after the 5th April 2026 but before your first payroll run of the new tax year.

• Prepare for the new April 2026 cap: Be aware that from April 6, 2026, provisional OWR processed through payroll will be strictly capped at the lower of 30% of qualifying employment income or £300,000. You need to verify that your payroll software and processes are updated to handle this new limit for the upcoming tax year.

• Communicate with expats: Remind eligible employees that claiming OWR under the new FIG regime will cost them their UK personal tax allowance. They will need to formally claim this on their Self-Assessment tax return.

  
  

2. Tax Equalisation and Modified PAYE (Appendix 6)

If you operate an Appendix 6 scheme for your tax-equalized inbound expats, you have been paying estimated PAYE to HMRC throughout the year.

• Run the true-up calculations: You must gather details of actual payments and benefits to accurately calculate the final "true-up" of the taxes due for 2025/26. This ensures the correct final figures are reported on the Month 12 Full Payment Submission (FPS).

• Gather global compensation data: Chase down data for equity vesting, bonuses paid in the home country, and shadow payroll figures. If these are missed on the final FPS, it creates a messy retrospective adjustment.

  
  

3. Short-Term Business Visitors (STBVs)

If you have employees visiting the UK from overseas offices for business purposes and you do not have a tool to help you track and flag potential issues, you cannot afford to ignore the day counts.

• Audit travel calendars now: Tally up the exact number of midnights spent in the UK for all business visitors.

• Prepare Appendix 4 reports: You must start putting together the information and documents you need to provide to HMRC to prove they are exempt from UK PAYE under a Double Taxation Agreement.

  
  

4. Relocation Expenses and Global Benefits (P11D/PSA)

Expats often receive complex benefits that regular domestic employees do not, such as cost-of-living allowances, housing, or school fees.

• Audit the £8,000 relocation exemption: Qualifying relocation expenses are tax-free up to £8,000. Review your expat ledgers to ensure you haven't breached this limit. Any excess must be reported.

• Categorise for P11D vs. PSA: Determine which benefits will be reported on the individual’s P11D (due July 6) and which minor/irregular benefits will be swept into a PAYE Settlement Agreement (PSA) where the company bears the tax cost.

  
  

5. Social Security (Certificates of Coverage / A1s)

Double social security charges are a massive and unnecessary drain on corporate cash flow.

• Check expiry dates: Review your expat roster and verify that all A1 forms (for EU/EEA/Switzerland) or Certificates of Coverage (for countries with reciprocal agreements) are valid and up to date.

• Initiate renewals: If any certificates are expiring early in the 2026/27 tax year, apply for renewals immediately to maintain exemption from UK National Insurance Contributions (NICs).