The mechanism that stops a UK payroll deducting UK tax on duties performed abroad. Without it, PAYE runs on the whole salary and you reclaim the difference a year later.
PAYE is built on a simple assumption: the employer knows the employee's whole liability and deducts it as it goes. That assumption breaks the moment an employee's duties are split between countries, because part of the salary relates to work the UK has no right to tax and the payroll has no way of knowing which part.
A section 690 direction is HMRC's answer. On application by the employer, HMRC directs that PAYE be operated on a specified proportion of the employee's earnings — the part attributable to UK duties — rather than on all of it. The rest is paid without UK deduction, and the final position is settled through the employee's tax return.
Who Actually Needs One
- Non-residents still on a UK payroll who perform some duties in the UK. The UK workdays remain taxable here; the overseas ones do not.
- Employees on international assignment whose time is genuinely split across countries during the year.
- Some arriving employees whose earnings are partly attributable to duties performed before they came, depending on their circumstances.
Who does not need one is equally important. If none of your duties are performed in the UK, the cleaner instrument is an NT tax code, which removes UK income tax from the payment entirely. Section 690 is for the middle case, where the answer is a proportion rather than all or nothing.
The employer applies, not the employee. This is a direction to the person operating the payroll. You can ask for it, gather the evidence and chase it, but the application itself has to come from your employer, and some HR functions have never handled one.
How the Proportion Is Set
The direction is based on an estimate of the split of duties, usually expressed as a percentage of earnings, and it is normally built from a projected workday pattern for the year. That makes two things true at once: it is provisional, and it needs to be realistic. A direction based on a pattern nobody expects to hold will produce a large balancing figure at the end of the year, in whichever direction the estimate was wrong.
| Position | Right instrument | What payroll does |
|---|---|---|
| All duties abroad, non-resident | NT code | No UK income tax |
| Duties split UK and abroad | Section 690 direction | PAYE on the UK proportion |
| All duties in the UK | Normal code | PAYE on everything |
| Nothing applied for | — | PAYE on everything, reclaim later |
What It Does Not Cover
A section 690 direction deals with income tax only. National Insurance follows an entirely separate set of rules about which country's social security system you belong to, and a direction has no effect on it whatsoever. It is completely normal, and frequently correct, for a payroll to operate a direction for tax while continuing to deduct UK NI — see A1 certificates and social security abroad for how that side is settled.
It also does not decide your residence status, does not remove the need to file, and does not by itself grant treaty relief. It is a cash-flow instrument: it moves the tax to the right amount at the right time instead of collecting too much and refunding it later.
Records the Direction Depends On
Because the split is estimated in advance and settled in arrears, the workday record is the whole game. Keep a dated log of where each working day was physically spent, distinguishing work from travel and from leave. The same record supports your residence position and, if the year is ever queried, is the only thing that will substantiate the proportion. Our note on proving non-residence covers what a usable log looks like, and overseas workday relief covers a related but distinct relief for some people arriving in the UK.
Frequently Asked Questions
Can I apply for a section 690 direction myself?
No. The direction is issued to the employer operating the payroll, so the application has to come from them. You can supply the workday evidence and press the case, but you cannot make the application.
What is the difference between a section 690 direction and an NT code?
An NT code removes UK income tax from the payment entirely and suits someone whose duties are wholly abroad. A section 690 direction applies PAYE to a proportion, and suits someone whose duties are genuinely split.
Does a direction stop my National Insurance being deducted?
No. It deals with income tax only. National Insurance follows separate rules about which country's social security system applies, and is settled through A1 certificates or the relevant reciprocal agreement.
What if the actual workday split differs from the estimate?
The difference is settled through your tax return. That is why the estimate should be realistic rather than optimistic, and why the workday log matters more than the original application.
Related Guides
Keep reading with these related guides and calculators:
- The NT tax code — the all-or-nothing alternative
- A1 certificates — the National Insurance side
- Overseas workday relief — the related relief for arrivers
- Working remotely abroad — where split duties usually start
- Proving non-residence — the workday log the direction rests on
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