As we enter the festive season, many employees across the UK are once again working from home. The Prime Minister indicated that from today (Monday, 13th December) employees should “Go to work if you must, but work from home if you can”, Lee McIntyre-Hamilton reports.
The likelihood is that, with the exponential rise in Omicron globally, official UK guidance and the upcoming holiday season, many non-UK nationals will return overseas to live and work from home.
So, it is worth employers reminding themselves of the potential employer compliance implications, particularly where an employee’s home may be outside of the UK.
What happens if an employee works from home overseas?
Carry on regardless
From a UK payroll perspective, employees should continue as normal, at least in the short term. That is, PAYE and NIC should be deducted from the employees pay in the same way as if they were living and working in the UK.
Irrespective of the individual’s personal tax position, in the absence of any alternative instructions from HMRC (e.g. the issuance of a No Tax code) or on presentation of formal documentation by the employee (e.g. the provision of a Form A1 which enables the cessation of UK NIC), UK employers are required to fulfil their usual statutory duties in respect of their employees when it comes to PAYE and NIC.
Track days
In the initial months of the pandemic, many employers lost track of how many days their employees had spent outside the UK and, in some cases, the countries in which their employees were working.
Therefore, learning from this, employers should implement a process whereby employees are asked to declare when they intend to live and work outside the UK and to track their non-UK days.
If the period working from home overseas becomes prolonged, this will make it much easier for employers and employees to determine their compliance position in the UK and overseas.
Review the non-UK compliance position
The non-UK compliance position for employees who return to work from home overseas is complex and depends on a range of variables, including the country in which the employee is working, the duration of work overseas, the number of days the employee has already spent in the overseas location and many other such factors. For example:
* where an employee is returning to work in Canada, they may potentially trigger non-UK compliance obligations for their UK employer from day 1 of work in Canada;
* employees who have already spent time working overseas in the last 12 months in their home country may find that they have become residents in their home country, triggering personal tax obligations. Whilst this does not necessarily mean that employer obligations will be triggered, it may mean employees finding themselves in a complex personal tax position. In these circumstances, many employers will want to at least flag this potential issue to their employees; and
* if employees stay for an extended period overseas (typically six months or more over any 12 month period, but it can be less depending on the circumstances) then employees may unintentionally trigger a corporate presence overseas for their UK employer.
Further details on the non-UK employer considerations can be found here.
Unfortunately, there are no meaningful ‘hard and fast’ criteria as to when employers should assess the position in such circumstances as the employer compliance position overseas can vary markedly depending on a range of variables, as indicated above.
However, to minimise risk, I would recommend that the position be reviewed after one month of work overseas by employees, particularly where employees have already spent time working overseas. Often at this stage, employers may want to consult a professional tax advisor to provide a view.
Author: Lee McIntyre-Hamilton
Lee has over 23 years of experience in international mobility, expatriate tax and employment tax. He works with a diverse range of international organisations, from small owner-managed businesses to large multi-national corporations and non-profit organisations. Lee delivers coordinated, joined-up global mobility tax, international social security and payroll advice across many territories globally. He is a published writer on international tax matters, notably the Tiley & Collinson UK Tax Guide.
Contact Lee: lee@globalpayrollassociation.com
As we enter the festive season, many employees across the UK are once again working from home. The Prime Minister indicated that from today (Monday, 13th December) employees should “Go to work if you must, but work from home if you can”, Lee McIntyre-Hamilton reports.
The likelihood is that, with the exponential rise in Omicron globally, official UK guidance and the upcoming holiday season, many non-UK nationals will return overseas to live and work from home.
So, it is worth employers reminding themselves of the potential employer compliance implications, particularly where an employee’s home may be outside of the UK.
What happens if an employee works from home overseas?
Carry on regardless
From a UK payroll perspective, employees should continue as normal, at least in the short term. That is, PAYE and NIC should be deducted from the employees pay in the same way as if they were living and working in the UK.
Irrespective of the individual’s personal tax position, in the absence of any alternative instructions from HMRC (e.g. the issuance of a No Tax code) or on presentation of formal documentation by the employee (e.g. the provision of a Form A1 which enables the cessation of UK NIC), UK employers are required to fulfil their usual statutory duties in respect of their employees when it comes to PAYE and NIC.
Track days
In the initial months of the pandemic, many employers lost track of how many days their employees had spent outside the UK and, in some cases, the countries in which their employees were working.
Therefore, learning from this, employers should implement a process whereby employees are asked to declare when they intend to live and work outside the UK and to track their non-UK days.
If the period working from home overseas becomes prolonged, this will make it much easier for employers and employees to determine their compliance position in the UK and overseas.
Review the non-UK compliance position
The non-UK compliance position for employees who return to work from home overseas is complex and depends on a range of variables, including the country in which the employee is working, the duration of work overseas, the number of days the employee has already spent in the overseas location and many other such factors. For example:
* where an employee is returning to work in Canada, they may potentially trigger non-UK compliance obligations for their UK employer from day 1 of work in Canada;
* employees who have already spent time working overseas in the last 12 months in their home country may find that they have become residents in their home country, triggering personal tax obligations. Whilst this does not necessarily mean that employer obligations will be triggered, it may mean employees finding themselves in a complex personal tax position. In these circumstances, many employers will want to at least flag this potential issue to their employees; and
* if employees stay for an extended period overseas (typically six months or more over any 12 month period, but it can be less depending on the circumstances) then employees may unintentionally trigger a corporate presence overseas for their UK employer.
Further details on the non-UK employer considerations can be found here.
Unfortunately, there are no meaningful ‘hard and fast’ criteria as to when employers should assess the position in such circumstances as the employer compliance position overseas can vary markedly depending on a range of variables, as indicated above.
However, to minimise risk, I would recommend that the position be reviewed after one month of work overseas by employees, particularly where employees have already spent time working overseas. Often at this stage, employers may want to consult a professional tax advisor to provide a view.
Author: Lee McIntyre-Hamilton
Lee has over 23 years of experience in international mobility, expatriate tax and employment tax. He works with a diverse range of international organisations, from small owner-managed businesses to large multi-national corporations and non-profit organisations. Lee delivers coordinated, joined-up global mobility tax, international social security and payroll advice across many territories globally. He is a published writer on international tax matters, notably the Tiley & Collinson UK Tax Guide.
Contact Lee: lee@globalpayrollassociation.com