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Working from home away from home

August 3, 2023 Speech Box

Employers looking to attract and retain top talent are increasingly permitting their employees to work overseas, often for months at a time.

Research published by the accountants RSM reports that 88% of businesses are struggling with employee turnover. Its research suggests that a third of businesses in the UK have responded by allowing staff to work remotely and outside of the UK.

Many employees welcome the opportunity to combine travel and work, and employers too will find it helpful in the ‘war for talent’, but it is a strategy that comes with risk unfortunately

Many countries, from Norway to Seychelles, have introduced ‘nomadic visas’ to encourage so-called digital nomads to relocate for a limited period of time, but they do come with strict requirements. They typically require a minimum income level and do not allow income to be generated locally.

Before relocating, employees need to understand any local tax implications and abide by the nomadic visa restrictions. If they do not, they might find themselves being taxed on their income in both the UK and in the country where they are working.

Perhaps more concerning are the tax implications for the employer. Will tax, national insurance and PAYE obligations sit in the UK or in the country where an employee is based?

Health and safety obligations need also be considered. It can add further and unwelcome levels of bureaucracy.

There is also the worrying risk of ‘permanency’, where a nomadic employee inadvertently triggers a corporation tax liability in the country in which they work. This can arise where management and control rests with the individual working overseas and is something directors and business owners need to consider.

Businesses wanting to offer staff the ability to work overseas for extended periods of time will need to consider the following points:

  • Is a work permit required?
  • Will they be paid in UK or local currency?
  • Will any additional tax implications arise for the employee and the employer?
  • How will local data protection laws affect the way an individual works?
  • Will the employer need to comply with any additional employment rights?

The key take away – take advice before leaving the UK.

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