Foreign employment

By Tolley in association with Annette Morley
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The following Employment Tax guidance note by Tolley in association with Annette Morley provides comprehensive and up to date tax information covering:

  • Foreign employment
  • Introduction
  • Non-UK employers
  • UK employers ― all employment duties overseas
  • UK employers ― part employment duties overseas
  • Real-time information (RTI) and the expatriate
  • The trigger documents

Introduction

To deal with practical issues immediately prior to a UK resident employee taking up an overseas employment, see the Outbound employees ― payroll issues and Pre-departure planning from an employer’s perspective guidance notes. This guidance note focuses on the position once the foreign employment is underway.

As indicated in the other guidance notes, statutory issues relating to foreign employment depend on factors including:

  • expected length of stay overseas
  • residency of the employer ― UK, EEA, or elsewhere
  • whether it is income tax or NIC that is being considered

Both employee and employer have their individual roles to play and it helps to achieve optimum efficiency if each is aware of the bigger picture. To assist in presenting this, a checklist of actions is available in the Pre-departure planning from an employer’s perspective guidance note.

Non-UK employers

If the individual is only going to be in foreign employment for a short time, such that he will not become non-UK resident, see the Temporarily overseas guidance note. The remainder of this guidance note assumes the length of employment will span at least a complete tax year and that as a result the individual will become non-UK resident.

If all employment duties for a non-UK employer are carried out entirely overseas, an individual who is not UK resident should have no liability to UK income tax on his earnings. This should apply from the date of his departure to work overseas under the split year treatment. This treatment, historically applied on an extra-statutory basis, has been on a formal basis under the statutory residence test (SRT) since 6 April 2013. See the Statutory residence test guidance note. The conditions required for the split year treatment to apply

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