Q&As

What are the UK tax implications for a UK employer when it employs a non-UK resident employee who works entirely in another country?

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Published on LexisPSL on 16/06/2021

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • What are the UK tax implications for a UK employer when it employs a non-UK resident employee who works entirely in another country?

What are the UK tax implications for a UK employer when it employs a non-UK resident employee who works entirely in another country?

Generally, an employee is subject to income tax in the UK on general earnings if the employee is resident in the UK. However, even if an employee is not UK resident, the employee will be subject to UK tax on employment earnings if the earnings are in respect of duties performed in the UK (or from overseas Crown employment). For more detail, see Practice Note: How employment income is taxed—concept of general earnings.

The PAYE regime requires tax to be deducted from relevant payments made by employers to employees on account of UK income tax. However, while an obligation to operate PAYE can arise where an employer is not based in the UK, an employer will not have a PAYE obligation in situations where there is no UK income tax liability because, for example, an employee is outside the scope of UK income tax. For more information, see Practice Note: PAYE—readily convertible assets, intermediaries and jurisdictional scope.

When a UK entity's employee works in a jurisdiction other than the UK, the employment tax provisions of that jurisdiction will need to be considered. It may

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