Moving your technology talent to the UK? Be aware of the tax implications

Last month British Airways launched their inaugural direct flight from San Jose, capital of Silicon Valley to London, as a result of growing travel demand from global technology firms; many of whom are looking to expand into the UK.

Such global tech businesses require their employees to be flexible and work internationally as business expansion occurs. While this can be an exciting time for both company and employee, the tax implications can be complex and shouldn’t be ignored.

So what’s new?
Recent years have seen greater complexity in employment taxes, bringing increased challenges for payroll functions in global technology businesses. Employees working on overseas assignments bring particular complexities, not least because of the additional expense and administrative burden attached. Failure to comply with UK and home country regulatory and tax requirements can be particularly costly to your business and can be avoided.
What are your obligations?

When sending employees on assignment to the UK employers have UK compliance obligations that must be met – otherwise costly penalties could be imposed. A few things to consider:
  • Wage withholding: UK requirements are strict. The obligation to deduct employee taxes from wages may apply even if your business does not employ the expatriate individual. Penalties for compliance failures can be harsh.
  • Double taxation: Where the employee will be in the UK for less than 183 days in the tax year and a claim under the appropriate double tax agreement is possible, then the Short Term Business Visitor rules may apply, and therefore PAYE easements may be possible.
  • Reporting of benefits and expenses: annual forms may need to be filed relating to employee expenses and benefits, even if paid outside the UK. There may also be a National Insurance Contribution (NIC) payment and reporting consequences.
  • Share reporting: UK requirements are complicated and you can easily trip up. Don’t assume expats are exempt.
  • NICs: social security tax must be considered. Periods of exemption and non-exemption need careful tracking. Social security treaties exist, but approval from the home country tax authorities is required in most cases to confirm an employee’s exempt status. 

How can Moore Stephens help?

Access to a Moore Stephens UK tax expert can be helpful for initial briefings and on-going support, particularly for registration with the tax authorities and completion of unfamiliar (and often complex) UK income tax returns. Such professional tax support could be included in employees’ assignment packages. For more information please contact John Williams.

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