Grow your team

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Find out how to grow your business in London with employees from outside the UK, whether they are permanent transfers, temporary assignments or just in London for a business trip.

Chris Gore, Global Mobility Director at RSM shares what you need to know to ensure full compliance with UK tax and National Insurance Contributions (NIC) obligations.

Permanent transfers

If you want to permanently fill a UK-based role with overseas talent, your new hire should be treated like any other UK employee.

That means you should process them through their UK payroll and complete statutory year-end reporting for UK income tax and NIC purposes (known as PAYE, which stands for pay as you earn). Learn more about UK tax and NICs.

Formal assignments

If you just need to hire someone for a temporary assignment in the UK, the implications for income tax are much the same as those for a permanent placement, and must be withheld under the PAYE system in real time (known as RTI, which stands for real time information).

One way to do this is to operate a shadow payroll, which means you can comply with UK tax law even while your new hire stays on their home country’s payroll.

If you’re paying UK taxes on behalf of your worker and they’re tax equalised — meaning their take home pay isn’t affected by working in the UK — you can take advantage of modified payroll, which relaxes strict RTI reporting obligations.

Travel and subsistence costs

If you reimburse your worker’s travel or accommodation, they might have to pay tax on those costs. However, generally speaking, if their assignment isn’t longer than 24 months, they could be eligible for tax relief.

Social security/National Insurance

Usually, both you and your employee have to pay NIC if they physically perform their duties in the UK. However, if the UK has an agreement with their home country, they might be able to remain in their local social security scheme. If there’s no agreement, you might be able to structure their assignment so that they’ll avoid NIC for the first 52 weeks of their employment.

Short-term business travellers

Business trips aren’t necessarily exempt from income tax and NIC. If your business has a global presence, and your overseas workers pay you a visit, there may be tax implications from their day of arrival, no matter how short the trip. However, you do have options:

Double tax treaties

The UK has one of the world’s widest networks of double tax treaties, which means your overseas workers can’t be taxed in both the UK and their home country. If your worker on a business trip is from a country where the UK has such a treaty, provided the relevant conditions are met, they won’t owe any tax.

Short-Term Business Visitors Arrangement

Another option is to enter Short-Term Business Visitors Arrangement (STBVA), also called an Appendix 4, with HMRC.

An STBVA means that, if the double tax treaty conditions are met, you don’t have to deduct tax under PAYE. However, you might still have to meet some tracking and reporting obligations through post-tax year corporate reporting. Unfortunately, the STBVA doesn’t cover NIC.

Non-resident directors

If you have a non-resident director working in the UK, be aware that they won’t be able to access tax relief through a double tax treaty, meaning you’ll have to operate PAYE on their earnings, and they’ll need to file a UK income tax return. Non-compliance could result in significant penalties.

Last updated: March 2024

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