Service to Employers
If you are bringing employees from overseas to work in the UK (expatriates), we can help ensure that you comply with your employer obligations whilst minimising costs. Here are some of our areas of expertise:
Tax equalisation
Many companies operate tax equalisation programmes. These ensure that expatriates receive a guaranteed net salary and benefits package. These schemes can operate in various ways. Usually, the expatriate’s guaranteed net salary is linked to the home country net salary, so the expatriate can budget accordingly. The employer normally pays the expatriate’s host country taxes, although this is partly funded by the difference between the expatriate’s gross and net pay.
We can guide you through the different methods of tax equalising your expatriate employees to determine the best policy for your company. Whether you’re considering implementing a new programme or whether you want to review your existing scheme, we can help. There is usually a cost to the employer for operating these schemes but many companies believe that this is offset by expatriates being secure about their tax position and consequently focusing on their new roles in the UK.
» Back to top
Tax relief on overseas workdays
If overseas employees come to work in the UK for less than three years and satisfy other conditions, we may be able to help them avoid UK tax on the income relating to any days they spend working outside the UK. To qualify for this tax saving, the income that relates to their non-UK workdays must be paid outside the UK and there are restrictions on remitting this income to the UK. If the company operates a tax equalisation programme, any tax savings arising from non-UK workdays will accrue to the company.
We can claim this tax relief on behalf of your expatriate employees, retrospectively if required. We can also obtain clearance from HM Revenue & Customs to enable you to reduce the PAYE you pay by the amount of this tax relief.
» Back to top
Tax free employer provided benefits
If overseas employees are seconded to the UK for less than two years and you provide them with accommodation, a subsistence allowance, and reimburse travel costs, we may be able to claim that you can provide these items to your employees tax free. This is a valuable tax saving.
» Back to top
Avoiding share plan nightmares
Non-UK share plans are often taxed differently in the UK to the home country. The legislation in this area is complex and has changed frequently during the last few years. UK tax and resulting PAYE obligations usually hinge on where the expatriate is resident on grant, exercise and disposal of shares and share options, and on whether the UK has a tax treaty with the home country. So careful monitoring of expatriate movements and share plan events is important.
As a result, you may still be obliged to withhold PAYE on certain share plan events and we can clarify your PAYE obligations so you are fully compliant. We can also help you to communicate potential tax charges to expatriate employees before they occur so that there are no unwelcome surprises.
» Back to top
Tax efficient overseas pension plans
If your expatriates continue to participate in their home company pension plans whilst working in the UK, careful planning can generate potential tax savings. Without the correct tax planning in place, employee contributions to non-UK pension plans must be made from after tax income. And any employer contributions made whilst expatriates are working in the UK are liable to UK tax.
However, if the plan conforms to certain rules it is possible to register it so that contributions can be treated as if they are made to a UK approved pension plan. This means that employee contributions can be offset against taxable income and there is no tax charge on employer contributions to the plan.
We review non-UK pension plans to determine whether they are suitable for such registration.
» Back to top
Social security
Many employees can continue to contribute to their home country’s social security system whilst working in the UK. This exempts both them and the company from paying UK National Insurance contributions. Alternatively, if home country social security costs are high, you may prefer them to participate in the UK National Insurance system.
We can help you review the social security options available to you and your expatriate employees, and make the relevant social security applications for your employees to remain in their home country system (where applicable). We measure the relative cost of paying into each social security system for you and for your expatriates (both financially and in terms of benefit coverage for your expatriates).
» Back to top
Short term business visitors and exemption from operating PAYE
Sometimes it is possible for overseas employees to work in the UK without paying tax here. Generally this occurs only where they spend short periods of time in the UK, and where the UK and their home country have a tax treaty. The qualifying criteria varies slightly from country to country but usually expatriates spending less than six months in the UK may be eligible for this tax exemption. Companies need to ensure that they formalise this tax exemption with HM Revenue & Customs. Importantly, if employees from your overseas operations regularly visit the UK on business trips you may also need to claim tax exemption for them also.
We can assess the status of your short term business visitors to determine whether they are eligible for this tax exemption. We can help you draft and implement internal guidelines so that key personnel in the UK and overseas are aware of the information that they need to collate for you to claim the appropriate PAYE exemption.
» Back to top
Employee arrival briefings
When overseas employees work in the UK they need to declare their presence and their tax status to HM Revenue & Customs. It is important that they declare their tax status correctly, as mistakes can mean that both they and the company become ineligible for certain tax breaks.
We can perform arrival briefings with your expatriate employees and discuss all applicable tax issues with the expatriate so that they are aware how they will be taxed whilst working in the UK and know what records to keep. We can also advise them on how to structure their overseas investment income and remittances and the arrival briefing is an ideal opportunity for us to ensure they understand this potentially complex area.
» Back to top
Tax return preparation
In addition to tax planning, we provide an efficient tax return service. We can prepare your expatriate employees’ tax returns and calculate their tax liabilities. If you operate a tax equalisation programme, we will direct any tax refunds to you as appropriate.
» Back to top
Cost management
Have you evaluated your expatriate compensation and benefit packages? Do they deliver what you intended? Different categories of expatriate employees have different requirements. How do you treat your short term and long term commuter expatriates? How long does a secondment last before it becomes a local hire? What happens on repatriation? And on termination?
We work with you to develop robust yet practical international assignment policies to support your expatriate staffing needs and help you control cost.
» Back to top
|
