From 30 March 2019, European Union citizens and their families will be able to apply to get either settled or pre-settled status in the UK.
According to the latest HMRC Employer Bulletin, where an employer pays or reimburses their employees' application, such a payment will be taxable as employment income as the payment is of direct monetary value to the employee.
Employers can also choose to meet the cost of this tax charge for employees. For many employers, says the bulletin, this can be managed using their existing arrangements with HMRC using a PAYE settlement arrangement (PSA), which allows employers to make one annual payment to cover all the tax and National Insurance due on minor, irregular or impracticable expenses or benefit for their staff.
Under the planned scheme for EU nationals to apply to stay in the UK, which is currently being piloted, those aged over 16 have to pay £65, with a cost of £32.50 for anyone younger.
However, following parliament's rejection of the government's Brexit plan, prime minister Theresa May has announced there are plans to waive the application fee when the scheme is rolled out in full in March.
