Changes for Short-Term Business Visitors (STBVs)

The UK budget announced that administrative burdens on UK employers will reduce from April 2020 for STBVs for UK headquartered companies, i.e. simplifying the tax treatment of STBVs from the foreign branch of a UK company.

The Global Payroll Association has been asked to provide more information about this change from the tax year 2020/21 and to give a brief history leading up to the announcement. 

The Spring Statement 2018 announced there would be a consultation on easing the STBV tax and administration treatment, all with the aim of ensuring the UK is an attractive location to headquarter a business.  The consultation followed in May 2018 at which time the government said this was not an indication that things would change but should be regarded as a process of informing the government.  The simplification consultation needed to consider 4 things:

1. Promoting the attractiveness of the UK
2. A reduction in administrative costs and burdens to employers and HMRC
3. The cost to the UK Exchequer and
4. Ensuring information and reporting obligations were not compromised

There were two broad policy options for consideration and response:

1. Extending the PAYE special arrangement UK workday rule and
2. A new tax exemption for STBVs from overseas branches.

Point 3.14 of the Red Book confirmed that, as a result of the consultation, administrative burdens on UK employers will reduce effective April 2020 in two areas:

1. The UK workday rule will increase from 30 days or less to 60 days or less and
2. The current PAYE reporting and payment deadlines of 19 April and 22 April will be extended to 31 May

So employers have two administration easements from 2020 when only one option was considered at the consultation stage.  The new tax exemption was not considered in the Summary of Responses document that was published at the time of the budget.  The reason for this is that the government said it saw little evidence from the responses to suggest that a tax exemption would influence the decision of multinational businesses to headquarter in the UK.

The necessary legislation is not included in the Finance Bill (No 3) 2018 – 19 but secondary legislation will introduce this into the Income Tax (Earnings and Pensions) Act 2003.    

The UK budget announced that administrative burdens on UK employers will reduce from April 2020 for STBVs for UK headquartered companies, i.e. simplifying the tax treatment of STBVs from the foreign branch of a UK company.

The Global Payroll Association has been asked to provide more information about this change from the tax year 2020/21 and to give a brief history leading up to the announcement. 

The Spring Statement 2018 announced there would be a consultation on easing the STBV tax and administration treatment, all with the aim of ensuring the UK is an attractive location to headquarter a business.  The consultation followed in May 2018 at which time the government said this was not an indication that things would change but should be regarded as a process of informing the government.  The simplification consultation needed to consider 4 things:

1. Promoting the attractiveness of the UK
2. A reduction in administrative costs and burdens to employers and HMRC
3. The cost to the UK Exchequer and
4. Ensuring information and reporting obligations were not compromised

There were two broad policy options for consideration and response:

1. Extending the PAYE special arrangement UK workday rule and
2. A new tax exemption for STBVs from overseas branches.

Point 3.14 of the Red Book confirmed that, as a result of the consultation, administrative burdens on UK employers will reduce effective April 2020 in two areas:

1. The UK workday rule will increase from 30 days or less to 60 days or less and
2. The current PAYE reporting and payment deadlines of 19 April and 22 April will be extended to 31 May

So employers have two administration easements from 2020 when only one option was considered at the consultation stage.  The new tax exemption was not considered in the Summary of Responses document that was published at the time of the budget.  The reason for this is that the government said it saw little evidence from the responses to suggest that a tax exemption would influence the decision of multinational businesses to headquarter in the UK.

The necessary legislation is not included in the Finance Bill (No 3) 2018 – 19 but secondary legislation will introduce this into the Income Tax (Earnings and Pensions) Act 2003.