MTT32050 - Calculating top-up amounts: Substance based income exclusion: Internationally mobile employees and assets
Source: gov.uk (2025-08-05)


Eligible payroll costs are apportioned where the employee spends 50% or less of their time working in the employer’s territory.

Eligible tangible asset amounts are apportioned where the asset is located in the employer’s territory for 50% or less of the period.

Internationally mobile employees

There are special rules for determining the eligible payroll costs of an employee who is not always working in the same territory as the employer (the member that incurs the payroll costs, see MTT32020 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32020)) is located.

If the employee spends more than 50% of their working time for the employer in the employer’s territory, their eligible payroll costs are included in full.

If 50% or less of the employee’s working time for the employer is spent in the employer’s territory, only a proportional amount of the payroll costs is to be included in the eligible payroll costs. The payroll costs are apportioned by the proportion of the time the employee spent in the employer’s territory.

The eligible payroll costs of an internationally mobile employee can only be included in the substance based income exclusion for the employer’s territory. The payroll costs cannot be included in the eligible payroll costs of another member where it has been excluded due to the employee working abroad.

The eligible payroll costs of internationally mobile employees are otherwise to be determined in accordance with the guidance at MTT32020 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32020).

Example

Markets Ltd is located in the UK. It has a marketing team that splits its time between the UK and visiting global customers. The total payroll costs of the team are £10 million in both 2024 and 2025.

For the 2024 period, each member of the team spends 55% of their time working for Market Ltd in the UK. This means that the full amount of their payroll costs (£10 million) can be used in calculating the eligible payroll costs.

For the 2025 period, each member of the team spends 45% of their time working for Markets Ltd in the UK. This means that only 45% (£4.5 million) of their payroll costs should be allowed when calculating the members’ eligible payroll costs.

Internationally mobile assets

There are special rules for determining the eligible tangible asset amount of an asset which is not located in the owner’s territory for the entire period.

If an asset is located in the owner’s territory for more than 50% of the period, the eligible tangible asset amount is included in full.

If an asset is located in the owner’s territory for less than 50% of the period, then the eligible tangible asset amount must be reduced in proportion to the amount of time for which the asset was located outside the owner’s territory.

The eligible tangible asset amount of an internationally mobile asset can only be included in the substance based income exclusion for the owner’s territory. The amount cannot be included in the eligible tangible asset amount of another member where it has been excluded because the asset is located abroad.

The eligible tangible asset amount of international mobile assets is otherwise to be determined in accordance with the guidance at MTT32030 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32030).

Example

Construction Ltd is located in the UK. It undertakes large construction projects in the UK and around the world. When it is involved in a project overseas, it may use some specialist plant from the UK.

For the 2045 period, items of plant and machinery with an eligible tangible asset amount of £100 million are used on an overseas project for 4 months of the period, and in the UK for 8 months. As the plant and machinery is used in the UK for more than 50% of the period, its tangible asset amount is recorded in full.

In the same period, a specialist tunnelling machine with an eligible tangible asset amount of £30 million is used on an overseas project for 292 days in the period and is located in the UK for the remainder of the time. As the machinery is located in the UK for only 20% of the period, its eligible tangible asset amount is reduced accordingly to £6 million (£30m * 73/365).