To download a PDF version of this document, click here
Date of publication: January 2012
In theory any individual undertaking employment duties in the UK is immediately liable to UK employment taxes, even if they are only in the UK for a matter of days.
Whilst this is the absolute position, it is simply not practical for the UK tax authorities to administer payments from somebody working in the UK for a short time, so there are a number of concessions available.
Three conditions which must be met for the concessions to apply are:-
- The individual must be resident in a country with which the UK has a relevant Double Taxation Agreement;
- The individual must be working for a UK company or a UK branch of an overseas company;
- The individual is expected to stay for less than 183 days in any 12 month period.
NB. Prior approval from the tax office is required in some cases.
It is important to bear in mind that if the individual overstays the thresholds they will become subject to UK taxes on the income from the day they arrived and they will then need to apply to get back any tax already paid on this income in their home jurisdiction.
An outline of the reporting requirements is provided as a general guide below:-
- Visiting UK for 1 to 30 days - no reporting requirements for employer or employee.
- Visiting UK for 31-60 days - no reporting requirement as long as there is no formal contract for employment in the UK and the visit does not form part of a more substantial stay.
- Visiting UK for 61-90 days - UK payroll taxes can be disregarded, but the employer must provide the following information to the tax office before 31st May following the tax year:
- Full name of individual;
- UK and overseas address;
- Details of employment duties undertaken;
- Date of commencement and cessation;
- Country where tax return is submitted which covers worldwide income;
- Confirmation that the UK company neither bears the cost of employment, nor acts as the employer during the assignment;
- Confirmation that in the last four years visits to the UK have been less than 364 days in total and 183 days in any one year.
- Visiting the UK for 91-183 days - payroll taxes can be disregarded, but the employer must provide all the information required above plus:
- US citizens must provide evidence of continuing US residence;
- For non-US citizens a statement from the home country tax authorities confirming residence in that country for tax purposes;
- A statement by the individual regarding their nationality, residence, date of birth, UK arrival date, confirmation that in last 5 years visits to UK had totalled less than 364 days in total and 183 days in any one tax year.