Brexit and the implementation period ― personal tax and employment taxes implications

By Tolley
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The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Brexit and the implementation period ― personal tax and employment taxes implications
  • Income tax for internationally mobile employees
  • Social security for internationally mobile employees
  • Personal allowances
  • Protective claims for relief under EU law
  • Risk finance investment schemes

The UK negotiated a Withdrawal Agreement and left the EU on 31 January 2020 with an 11-month implementation period up to 31 December 2020.

During this implementation period, the UK is no longer a member of the EU but is subject to current EU laws, remaining a member of the single market and customs union. The UK and the EU will continue to negotiate future trading relationships. However, given the current impasse between the UK and the EU, the possibility that the UK will leave the EU without any sort of deal on 31 December 2020 is still a possibility.

Therefore, whilst it is difficult to provide any certainty as negotiations are still ongoing, this guidance note provides an overview of the personal tax and employment tax areas that may be affected.

For commentary on the implications of Brexit on corporate taxes, see the Brexit and the implementation period ― impact for UK companies guidance note. The VAT implications are discussed in the Brexit and the implementation period ― overview guidance note.

Income tax for internationally mobile employees

Income tax legislation is contained in double tax treaties and UK law, not EU law. This means that the current position for individuals and employees regarding income tax will not be directly affected by Brexit. A brief summary of the income tax position is set out below.

An employee is subject to income tax in the UK based on residency and domicile, where work is carried out and where the employer is based amongst other factors. The most basic rule is that if employees are resident, or carrying out employment duties, in the

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