Brexit ― personal tax and employment taxes implications

Produced by Tolley
Brexit ― personal tax and employment taxes implications

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

  • Brexit ― personal tax and employment taxes implications
  • Income tax for internationally mobile employees
  • Double tax treaties
  • Social security for internationally mobile employees
  • Personal allowances
  • Maintenance payments
  • State pension
  • 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 (referred to as ‘exit day’) with an 11-month implementation period up to 31 December 2020.

During this implementation period, the UK was no longer a member of the EU but was subject to EU laws, remaining a member of the single market and customs union. On 24 December 2020, the European Commission and UK Government announced an agreement in principle on the legal terms of the future EU-UK relationship ― the EU-UK Trade and Cooperation Agreement (TCA).

The TCA was signed by UK and EU leaders and then approved by the UK Parliament on 30 December 2020, but will not fully enter into force until ratified by the European Parliament. However, the UK and EU agreed that the TCA will apply provisionally from 1 January 2021, pending full ratification by the European Parliament. The UK has enacted the EU (Future Relationship) Act 2020, which makes provision to implement the TCA in the UK.

While exit day was important in terms of being the date the UK ceased to be an EU member state, the majority of key domestic tax changes associated with Brexit take effect from the end of the implementation period (specifically, 11pm (GMT) on 31 December 2020, referred to as ‘[Implementation Period] IP completion day’), including the full repeal of the European Communities Act 1972, incorporation of retained EU law into the UK domestic legal regime, and the commencement of associated Brexit legislation and statutory instruments.

This guidance note gives an overview of the personal and employment tax areas affected by Brexit and some of the practical issues to consider. As the TCA was agreed only days before the end of the implementation period, further changes are possible. Much of the technical guidance issued before IP completion day remains relevant, though it is likely to be subject to further amendment and review following the end of the implementation period.

As revised Brexit notices

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