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Your cross border remote workers – do they pay visits to the UK?

Kenny Law, Director, Workforce Advisory
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You’re a fast growing UK company that has a highly specialised role that you’ve been struggling to fill for some time. You finally find a candidate with the right skillset, but that person lives outside the UK and they want it to continue that way. You therefore employ that individual on the basis that they can work for the company from their home outside the UK, but on the condition that they will visit their UK-based team on a regular basis (eg once a month).

As part of your planning when onboarding that individual, you recognise that the individual will be subject to local tax and social security in the country in which they reside, so you set-up a local payroll for that individual to ensure compliance as an employer in that country.

However, what many employers overlook in this scenario is that the individual’s visits to the UK may trigger a tax liability and PAYE reporting obligation in the UK. Whilst there are indeed rules in place which ensure that business travellers to the UK are exempt from UK tax and PAYE reporting obligations, these rules only apply to business travellers who meet certain criteria, such as the requirement to be employed by a non-UK company.

Fortunately, a special PAYE reporting arrangement (formally known as an Appendix 8 arrangement) is available for this type of scenario, which significantly reduces the administrative burden that would otherwise be placed on the employer. However, this arrangement is only available in respect of individuals who have no more than 60 UK workdays in a UK tax year.

Also, where there is a UK tax liability and/or PAYE reporting obligation, additional considerations arise – eg how do you manage double taxation – will the employer pick up the UK tax cost? If the employer meets the costs of individual’s travel to the UK, are these taxable too? The individual’s UK workdays may also be liable to UK National Insurance, which would be yet another unexpected cost. Additional discussions between the employer and employee will likely be needed to understand the impact on each party.

Top tip

When agreeing the terms of employment where the employee is expected to pay visits to the UK as part of their working pattern, it is important to assess whether these visits could trigger a tax or social security liability (and/or reporting obligation) in the UK. Not all visits to the UK will trigger this and consideration of various factors is needed (eg the employee’s role, nature of their activities carried out in the UK and frequency of visits to the UK). By building this step into the onboarding process and carrying out this assessment at the outset, any potential cost and compliance burden arising from such visits to the UK can be appropriately managed or avoided completely.

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Richard Austin
Richard Austin
Partner, Head of Global Business Solutions