Q. If I set up a UK business and bring my own staff into the country from overseas, what do I need to be aware of?

Esther Carder

Answered by Esther Carder, Partner, Kingston Smith

A. Before bringing staff into the UK, you need to ensure that they have the legal right to work here. The government has an online tool to help you establish their eligibility: https://www.gov.uk/legal-right-work-uk.

Once you have confirmed that your employee can work in the UK, the main considerations will be:

  • Short term visitors to the UK – When non-UK employees visit the UK for short periods, even for just a few days, their salary (even if paid outside the UK) falls within the UK employment tax system unless the rules and reporting obligations around Short Term Business Visitors are followed.
  • National Insurance (NI) exemptions for secondees – Where individuals come to work in the UK temporarily, it is normally possible to agree a period of exemption from National Insurance, ranging from one to five years depending on the employee’s home country.
  • Temporary Workplace Relief – Where employees are seconded to work in the UK for a period of up to 24 months, they can claim a deduction for the expenses they incur as a result of their attendance at a temporary workplace. These expenses can include amounts spent on accommodation, Council Tax, utility bills, subsistence and travel to and from work.
  • Overseas Workday Relief – In the first year of UK tax residence and the two subsequent years, an employee can split their income between UK and non-UK workdays. Provided the employee makes a valid remittance basis claim and the income attributable to non-UK workdays is not received or subsequently remitted to the UK, it is not taxable in the UK.

 

Q. What tax considerations are involved with employing a workforce in the UK?

Esther Carder

 

Answered by Esther Carder, Partner, Kingston Smith

A. All employees in the UK are subject to income tax and National Insurance Contributions so an employer is usually required to operate Pay As You Earn (PAYE) as part of their payroll.

PAYE

This is HMRC’s system to collect income tax and National Insurance, meaning that it is deducted from the employee’s gross pay before reaching the employee themselves.

Kingston Smith can operate your PAYE through its payroll system. Alternatively, you would need to choose your payroll system to record details, calculate pay and deductions and report to HMRC.

National Insurance Contributions (NIC)

NIC is essentially a tax on earnings.

Employers currently pay NIC at the rate of 13.8% of employees’ gross salary above £8,112 per year, whilst employees pay additional NIC at a rate of 12% of salaries between £8,060 and £43,000 and 2% on all earnings above that. Meanwhile, self-employed individuals are liable to lower rate NICs.

The Government has introduced an allowance of £2,000 per year that some businesses can offset against their employer’s NIC liability.

Expatriate tax (if applicable)

Expatriate tax is an area where advice must be sought well in advance of an employee coming to or leaving the UK as, often, steps must be taken prior to arrival or departure to ensure that opportunities to claim deductible living expenses, exemptions from National Insurance and relief for non-UK work days are not missed, and to ensure that the employer’s PAYE and NIC obligations are met as appropriate.