News 4
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:
- •
PAYE obligations
- •
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 and asset purchases—overview.
PAYE obligations
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
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Jurisdiction(s):
United Kingdom
Related documents:
Practice notes 7
- Cross-border private M&A transactions
- Notional payments not made good—the section 222 charge
- PAYE compliance and RTI
- PAYE implications of employment-related securities
- PAYE settlement agreements
- Section 198 and 199 elections on transactions involving real estate
- Share sale or asset sale—tax considerations
Precedents 1
Related legal acts:
Key definition:
Retention definition
What does Retention mean?
Retention is a percentage of the sums payable by way of interim payment deducted by the employer and held until completion. Half of the retention is released on practical completion, the other half on the expiry of the defects liability period or issuance of a certificate of making good defects.
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