If you are a non-resident of the UK, there is no UK tax payable on the income you are receiving outside the UK. It does not affect whether you work for any UK employer or are paid in the UK.

If your foreign job starts during the tax year, you may be taxed as a UK tenant for the first year and a non-UK resident for the second year. If you are willing to be a non-resident, you have to fill and submit the form P85, which asks you for the detail of your overseas job. 

Keep reading to get valuable tax advice from our experts in Walsall.

Merely Incidental Duties

If you are a non-UK resident and do some work related to foreign jobs in the UK, you are not subject to UK tax payable. Every case is different, but HMRC has specified the work done In the UK, which is the same as overseas work, so it is not incidental. It is the work they are doing.

Actions that are observed as incidental consist of:

  • Interpreting generic business emails
  • Arranging travel and meetings
  • Contributing to staff matters
  • Responding to business results or employee performance

For example: If you are an employee of a foreign subsidiary of any UK firm and you visit the UK headquarters to take instructions and present reports, such action is viewed as “merely incidental” to foreign duties.

People discussing something at an office

Duties that are Not Merely Incidental:

Such obligations include:

  • Actions that are part of your duties
  • Providing instructions or guidance to colleagues
  • Reporting on business results and the performances
  • Examining information to generate results, give recommendations
  • Discussion with colleagues and meetings with clients, shareholders, and directors
  • Discussions on work follow up

Civil Servants and Military Personnel

Groups that perform all their UK duties are subject to UK tax.

Attending Directors’ Meetings

One of the core functions of the company’s director is to attend board meetings. To appear for board meetings is not “incidental” unless the director does not usually appear for one.

Tax Repayments

If you become a non-UK resident, there is a great chance you will be eligible for a tax refund (rebate). This is possible because of PAYE; the person’s monthly tax deduction undertakes to earn some of the income for the whole tax year.

For example

If David’s salary is £35,000, his monthly tax deduction is almost £500. If he becomes a non-UK resident in the middle of the tax year, his UK income for the year will be £17,000, not £35,000, and he will be eligible for a tax compensation of over £1,000.

Relocation Costs

If your company helps you shift workplace, £8,000 expenses can be refunded tax-free. This exception is not possible if your company pays you a lump sum as you demand.

Expenditures that qualify contains: interest on loans, Costs sustained on buying a new home and selling the old one (This includes estate agent’s fees, legal fees, stamp fees, and redemption fees), temporary housing costs, removal costs, travel costs, cost of getting new domestic items like cookers, curtains, carpets, etc.

Specific prices paid by your employer are not excused, including mail re-direction, mortgage payments (for your current home), compensation paid for any loss on the sale of your home or any other losses, and council tax.

A person is working

Double Tax Treaties

A simple tax treaty shall state that payment earned by an occupant of country A in respect of being an employee in country B will be taxed only in country A under the following circumstances:

  • Non-Resident Employer. The payment is paid by a company not present in country B.
  • Permanent establishment. The income is not paid by a permanent institution that the company has in country B.
  • The 183-Day RuleA person present in country B for not more than 183 days during the concerned tax year.

National Insurance 

Like UK national insurance, many nations charge social security charities. If you work overseas, you may be a part of UK national insurance, or you may have to make aid in the nation where you live. This depends on where you go and how much time you spend as a foreign employee.

The EEA or Switzerland

The universal rule is to pay social security contributions in the nation you work. But rules differ if you work in more than one country or outside one country.

For example

If your UK company sends you to work in a Switzerland or EEA country for a period expected time of two years, you will remain to pay UK national insurance at present.

The Position from 1 January 2021

At the writing stage, the UK is in an evolution period until 2020. Under the “Withdrawal Agreement,” the UK is treated as an EU associate state for most resolutions; this includes social security organizations. It is agreed that workers working in EU nations will depend on existing provisions. If, by January 2021, the EU and UK will not reach an agreement, it is possible that social security instructions will not apply to new postings.

Countries with Social Security Agreements

The UK has social security contracts with numerous nations, including Barbados, Bosnia and Herzegovina, Bermuda, Chile, Canada, Japan, Israel, Jamaica, Guernsey Jersey, Mauritius, Kosovo, North Macedonia, Philippines, Montenegro, Serbia, South Korea, USA, and Turkey.

Other Countries

The rule is that you will have to pay national insurance in the nation where you are employed. Though, you will have to pay UK national insurance for the first 52 weeks if:

  • You are a resident of the UK.
  • Your company has a place of business in the UK.
  • You were a UK resident before working overseas.

Working in the UK or Overseas due to Coronavirus

For employees working in Switzerland, EEA, and EU, because of covid 19, UK national insurance or social security contributions should remain paid as usual unless there are further notifications.

Working from Home in Another Country

This pandemic covid 19 helped many employees and companies to discover work from home. They made this ease a permanent routine. This reduced travel costs, saved time, and improved work-life balance. The businesses or firms residing and working in one county have to pay tax according to their terms.

Tax consultants in London

If you want more information on reducing your annual tax bills, you can count on our expert tax consultants. We have been helping people with their tax-related issues for a long time. Whether you need property tax advice or business tax consultation, contact us now.

Print Friendly, PDF & Email