Member Article

Expatriate tax rules set to change

New rules around expatriate employees will come into effect on 6th April to determine whether individuals are resident in the UK for tax purposes.

These changes will have a significant impact on employers and employees who are globally mobile, or divide their time between the UK and abroad.

Manchester-based specialist on expatriate tax, Davyd Fisher, from Grant Thornton gave his advice on how these changes could impact businesses:

“For employees working full time abroad, there’s now a defined amount of time people can spend working in the UK before they become resident for tax purposes – with the threshold set at 30 work days.

“Previously, depending on the type of work undertaken, it was theoretically possible for people to work 50, 60 of 70 days here and still be considered non-resident.”

Employers must track globally mobile staff to ensure they understand how much time people are spending in each country.

Davyd continued: “If the member of staff goes over a certain threshold, that individual’s ties to the UK will come into question and criteria such as whether the individual has an accessible home in the UK or whether they have a UK resident family will need to be considered, which currently the employer is unlikely to know.”

“The new rules have been introduced to provide clarity but there are some areas that still require further clarification – particularly in terms of what constitutes a ‘home’,

“Tax residency is a complex area, and the individual being non-resident does not mean that the employer will have no obligations, so people should take professional advice or risk an expected bill from HMRC.”

The new test will mix objective tests, such as day-counting, with more subjective tests like how closely a taxpayer is linked to the UK.

A working day is now defined as anything over three hours, while ‘incidental’ work days for training or subordinate activities will be included in the 30 day limit.

Previously, there was no limit of incidental days someone from outside the UK could spend inside the country.

The SRT will apply to individuals for income tax, capital gains tax and inheritance tax, but not to national insurance and non-tax purposes.

This was posted in Bdaily's Members' News section by Miranda Dobson .