Pre-entry planning for UK inbound assignees from an employer’s perspective

Produced by Tolley in association with Sarah Robert of James Cowper Kreston
Pre-entry planning for UK inbound assignees from an employer’s perspective

The following Employment Tax guidance note Produced by Tolley in association with Sarah Robert of James Cowper Kreston provides comprehensive and up to date tax information covering:

  • Pre-entry planning for UK inbound assignees from an employer’s perspective
  • Determine type of move
  • Determine remuneration package
  • Will the employee stay in home social security?
  • Review tax and social security implications ― home and host country
  • Timing of the assignment
  • Cost projections and budgets
  • Personal tax advice in home country
  • Visa / work permit application
  • Pension considerations
  • More...

Determine type of move

The employer must decide the terms under which the employee should be taken on in the UK. This can range from an assignment through to direct local hire. An assignment usually means that the employee retains some connection with his home country, from a continuing employment relationship with his home employer through to on-going payments into the overseas social security or pension arrangements. The employee may be compensated for the move overseas with relocation costs reimbursed by the employer. He may also receive additional support, with his employer paying for costs in the UK such as accommodation and schooling, and / or he may be given a cost of living allowance.

In the case of an assignment, the employer should consider at the outset how long the assignment is expected to last and the cut-off point, particularly if paying out significant costs relating to the assignment.

Determine remuneration package

The employer needs to consider the employee’s remuneration package. For a local hire arrangement, the employee has to be assimilated to a relevant grade or level in the local organisation. The employee is most likely to receive the same gross pay and benefits package as local employees at that level.

If an assignment is involved, the employer needs to decide whether the employee will be paid gross or be tax-equalised (ie given a net pay equivalent to what he would have received had he remained in his host country).The employer may decide on a hybrid arrangement whereby the employer pays the tax on only some elements of the package such as assignment-related elements, eg schooling or housing.

The employer may also consider tax protection, which generally means the employee pays his own tax in the host country (UK) but this is then compared to his home country tax at the end of the year. If he has paid less, he is allowed to keep the difference but the employer makes good any additional liability.

Short-term and commuter style

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