The following Tax guidance note provides comprehensive and up to date legal information covering:
When employees are transferred along with the business in which they work pursuant to the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations 2006, SI 2006/246, there will be numerous employment tax implications to consider, including:
national insurance contribution (NICs) liabilities, and
the tax treatment of payments made to employees on the transfer
If the transferring employees have been granted share incentives, care should be taken in respect of those arrangements. For detail, see Practice Note: Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and share incentives.
This Practice Note does not consider the non-tax aspects of a TUPE transfer, as they are comprehensively considered in the TUPE subtopic, see: TUPE—overview.
Employers are required to deduct tax from relevant payments to employees under the PAYE regime. On a TUPE transfer, given there will be two entities that hold the position of employer (albeit at different times), it will be important to ascertain which entity is responsible for complying with the PAYE requirements in respect of all pre- and post-transfer payments made to employees.
For an overview of the PAYE regime, see Practice Note: Scope of the PAYE system and for detail on the real time information (RTI) obligations, see Practice Note: PAYE compliance and RTI.
The entity transferring the business and employees must:
operate PAYE on any payments
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