Pre-departure planning from an employer’s perspective

Produced by Tolley in association with Annette Morley
Pre-departure planning from an employer’s perspective

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

  • Pre-departure planning from an employer’s perspective
  • Introduction
  • Planning points relevant to income tax
  • Will some of the duties continue to be in the UK?
  • Tax equalisation
  • Planning points relevant to national insurance
  • Other issues

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant tax changes associated with Brexit began to take effect. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit ― personal and employment tax implications guidance note.


Practical issues for payroll operation when employees are leaving the UK are covered in the Outbound employees ― payroll issues and other legislative points in the Reporting requirements on leaving the UK guidance notes.

This section considers opportunities for UK employers to improve the tax consequences for themselves or their employees when the latter are about to depart for overseas employment.

Ensure that all agreements made between employer and employee are set out in writing in an employment contract. That should include stating the obvious, such as whether the employee is actually employed by the UK entity or the overseas entity or both.

Planning opportunities occur particularly where the same employer, or at least another group company, will continue to be the employer of the overseas individual. Nevertheless, some steps will be applicable even if the employee leaves to work for an unrelated overseas employer.

Planning points relevant to income tax

Are any bonuses due? It does not provide any reduction in tax just to delay paying an employee’s bonus or holiday pay until after he has become non-resident. He will be taxed on the basis of where he was resident at the point of his earnings, not where he was resident when he received payment (see the Taxation of cash earnings guidance note). It may be possible to delay a decision on bonuses until after the employee has moved, but care needs to be taken over directors as the trigger point for tax may still be a point before the director’s departure

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