{"id":30431,"date":"2019-09-30T09:32:48","date_gmt":"2019-09-30T01:32:48","guid":{"rendered":"https:\/\/zegal.com\/?p=30431"},"modified":"2023-01-18T13:52:54","modified_gmt":"2023-01-18T05:52:54","slug":"tax-rules-for-foreign-employment-in-the-uk-part-2","status":"publish","type":"post","link":"https:\/\/zegal.com\/en-hk\/blog\/post\/tax-rules-for-foreign-employment-in-the-uk-part-2\/","title":{"rendered":"Tax Rules for Foreign Employment in the UK: Part 2"},"content":{"rendered":"<div id=\"contentsContainer\">\n<div id=\"contents\">\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-large wp-image-30519\" src=\"https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-1024x683.jpg\" alt=\"\" width=\"1024\" height=\"683\" srcset=\"https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-1024x683.jpg 1024w, https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-300x200.jpg 300w, https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-768x513.jpg 768w, https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-640x427.jpg 640w, https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-1200x801.jpg 1200w, https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-1920x1281.jpg 1920w\" sizes=\"auto, (max-width: 639px) 98vw, (max-width: 1199px) 64vw, 770px\" \/><\/p>\n<\/p>\n<\/div>\n<p><span id=\"E1456\" class=\"qowt-font5-Arial\"><a href=\"https:\/\/zegal.com\/blog\/post\/tax-rules-for-foreign-employment-in-the-uk-part-1\/\">Last week<\/a> we explored how working internationally <\/span><span id=\"E1457\" class=\"qowt-font5-Arial\">comes with <\/span><span id=\"E1459\" class=\"qowt-font5-Arial\">restrictive and contemporaneous <\/span><span id=\"E1463\" class=\"qowt-font5-Arial\">challenges that included the dreaded word: taxation.<\/span><span id=\"E1471\" class=\"qowt-font5-Arial\">\u00a0Any resident in the United Kingdom is subject to the taxation of their <\/span><span id=\"E1472\" class=\"qowt-font5-Arial\">worldwide<\/span><span id=\"E1473\" class=\"qowt-font5-Arial\"> income and gains. We covered the topics of dual contracts, and residence and domicile. This week, we&#8217;ll launch into split year treatment, e<span id=\"E1628\">mployee compliance obligations, and employment law. Ready? <\/span>\u00a0<\/span><\/p>\n<div id=\"contents\">\n<h4 id=\"E1575\" class=\"qowt-stl-NormalWeb\"><span id=\"E1576\" class=\"qowt-font5-Arial\">Split year treatment<\/span><\/h4>\n<p id=\"E1577\" class=\"qowt-stl-NormalWeb\"><span id=\"E1578\" class=\"qowt-font5-Arial\">Under the statutory residence test, an individual is either UK resident or non-UK resident for the whole of a tax year. <\/span><\/p>\n<p class=\"qowt-stl-NormalWeb\"><span id=\"E1578\" class=\"qowt-font5-Arial\">However, there have been some breaks to lessen the harshness of this rule. If in a tax year, the employee either leaves the UK to live or work abroad, or comes from abroad to live and work in the UK, and certain conditions are met, the tax year will be &#8220;split&#8221; into two parts. <\/span><\/p>\n<p class=\"qowt-stl-NormalWeb\"><span id=\"E1578\" class=\"qowt-font5-Arial\">Here&#8217;s how it works:<\/span><\/p>\n<p id=\"E1579\" class=\"qowt-stl-NormalWeb\"><span id=\"E1583\" class=\"qowt-font5-Arial\"><strong>UK part:<\/strong> in which the employee is charged to tax as a UK resident. <\/span><\/p>\n<p id=\"E1584\" class=\"qowt-stl-NormalWeb\"><span id=\"E1588\" class=\"qowt-font5-Arial\"><strong>Overseas part:<\/strong> in which, the employee is charged to tax as a non-UK resident. <\/span><\/p>\n<p id=\"E1589\" class=\"qowt-stl-NormalWeb\"><strong><span id=\"E1590\" class=\"qowt-font5-Arial\">International employments and employer&#8217;s duties<\/span><\/strong><\/p>\n<p id=\"E1591\" class=\"qowt-stl-NormalWeb\"><span id=\"E1592\" class=\"qowt-font5-Arial\">A UK employer is under the usual statutory duties to operate PAYE on earnings paid to employees. However, the employer should seek a direction from HMRC to determine the portion of earnings subject to PAYE if the employee is:<\/span><\/p>\n<p id=\"E1593\" class=\"qowt-stl-NormalWeb\" style=\"padding-left: 40px;\"><span id=\"E1594\" class=\"qowt-font5-Arial\">\u2022<\/span><span id=\"E1597\" class=\"qowt-font5-Arial\">Not resident in the UK but liable to tax on UK source earnings.<\/span><\/p>\n<p id=\"E1598\" class=\"qowt-stl-NormalWeb\" style=\"padding-left: 40px;\"><span id=\"E1599\" class=\"qowt-font5-Arial\">\u2022<\/span><span id=\"E1602\" class=\"qowt-font5-Arial\">Likely to be entitled to split year treatment. <\/span><\/p>\n<p id=\"E1603\" class=\"qowt-stl-NormalWeb\" style=\"padding-left: 40px;\"><span id=\"E1604\" class=\"qowt-font5-Arial\">\u2022<\/span><span id=\"E1607\" class=\"qowt-font5-Arial\">Likely to be entitled to overseas workday relief under the new or transitional rules.<\/span><\/p>\n<p id=\"E1608\" class=\"qowt-stl-NormalWeb\"><span id=\"E1609\" class=\"qowt-font5-Arial\">Most people working as an employee in the UK have a UK employer, or are <\/span><span class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">attached to a business in the UK which is treated as their employer, who is then legally responsible for deducting Class 1 Nati<\/span><span id=\"E1610\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">onal Insurance from their pay. <\/span><span id=\"E1611\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">Where <\/span><span id=\"E1612\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">there is no business in the UK <\/span><span id=\"E1613\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">responsible for deducting National Insurance, the employee must pay <\/span><span id=\"E1614\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">their <\/span><span id=\"E1615\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">own C<\/span><span id=\"E1616\" class=\"qowt-font5-Arial\" style=\"font-size: inherit;\">lass 1 National Insurance to HMRC.<\/span><\/p>\n<\/div>\n<\/div>\n<div id=\"contentsContainer\">\n<div id=\"contents\">\n<p id=\"E1617\"><span id=\"E1622\">If you need to pay tax, you usually report your foreign income in a <\/span><span id=\"E1624\">Self Assessment<\/span><span id=\"E1626\"> tax return. <\/span><\/p>\n<h4 id=\"E1627\"><span id=\"E1628\">Employee compliance obligations<\/span><\/h4>\n<p id=\"E1629\"><span id=\"E1630\">Tax returns that are <strong>filed electronically are<\/strong> <strong>due by 31 January following the tax year-end, which is 5 April.<\/strong> Paper returns have an earlier deadline of 31 October following the ta<\/span><span id=\"E1631\">x year-end<\/span><span id=\"E1632\">.<\/span><\/p>\n<p id=\"E1633\"><span id=\"E1634\">Employment income is subject to tax and social security withholding under the PAYE system. If an individual is taxable on employment income, the obligation to withhold rests with either the employer or, if the employer is not operating withholding, it rests with the \u2018host\u2019 employer. All employers are now required to report their payroll information to the UK Revenue authority in \u201creal time\u201d. Setting up a new payroll and a new employee to report in real-time can take some time. Therefore it is recommended that employers seek advice as soon as they intend to send an employee on secondment. For short term business visitors, it is recommended that employers obtain a \u201cshort term business visitors\u201d agreement with the UK Revenue authority, in order for the payroll reporting obligations to<\/span><span id=\"E1635\"> be relaxed for such employees.<\/span><\/p>\n<h4 id=\"E1637\"><span id=\"E1638\">Employment law<\/span><\/h4>\n<p id=\"E1639\"><span id=\"E1640\">UK Employment Tribunals are increasingly willing to accept that individuals may claim UK statutory employment rights (such as the right not to be unfairly dismissed) where a sufficient connection with the UK can be shown. This could potentially apply to employees who are not UK nationals, or who do not work for a UK registered employer or who do not actually work in the UK. In addition, certain mandatory rules apply where a worker is posted from another EU country to the UK, meaning that the worker will be protected by minimum wage, working time and anti-discrimination legislation.<\/span><\/p>\n<p id=\"E1642\"><span id=\"E1643\">In essence, employers and employees that engage in employment relationships overseas, whether short term or long term, should ensure they have discussion with regard to taxation at the point of agreeing any engagement. Both parties should be clear on the rules of taxation that are applicable to their relationship<\/span><span id=\"E1644\">. Transparency is key and a true assessment of the rules that are govern the taxation of exchanged earnings can only be made where parties offer full and frank disclosure about their liabilities.<\/span><\/p>\n<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-25368 alignleft\" src=\"https:\/\/zegal.com\/wp-content\/uploads\/2019\/04\/Photo-2.jpg\" sizes=\"auto, (max-width: 639px) 98vw, (max-width: 1199px) 64vw, 115px\" srcset=\"https:\/\/zegal.com\/wp-content\/uploads\/2019\/04\/Photo-2.jpg 263w, https:\/\/zegal.com\/wp-content\/uploads\/2019\/04\/Photo-2-247x300.jpg 247w\" alt=\"\" width=\"115\" height=\"140\" \/><em>Terri Schofield is a first year LLM with LPC student at BPP, Manchester. Alongside completing her post graduate studies, Terri works full time at DWF Law as an Employment Law Legal Adviser. Terri also sits as the UK Chair of DWF OutFront, their LGBT+ Network, where she is proactive in increasing visibility and sourcing opportunities for DWF\u2019s LGBT+ employees.<\/em><\/p>\n<\/p>\n<p style=\"text-align: center;\"><em>This article does not constitute legal advice<\/em><\/p>\n<p class=\"p1\" style=\"text-align: center;\"><i>The opinions expressed in the column above represent the author\u2019s own.<\/i><\/p>\n<p class=\"p2\" style=\"text-align: center;\"><span class=\"s1\"><a href=\"https:\/\/register.zegal.com\/\"><b>Start managing your legal needs with Zegal today<\/b><\/a><\/span><\/p>\n<\/p>\n<\/div>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/tax-rules-for-foreign-employment-in-the-uk-part-1\/\">RELATED READING:TAX RULES FOR FOREIGN EMPLOYMENT UK: PART 1<\/a><\/p>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/a-letter-to-an-aspiring-lawyer-from-an-aspiring-lawyer\/\">READ MORE FROM TERRI SCHOFIELD: A Letter to an Aspiring Lawyer from an Aspiring Lawyer<\/a><\/p>\n<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Last week we explored how working internationally comes with restrictive and contemporaneous challenges that included the dreaded word: taxation.\u00a0Any resident in the United Kingdom is subject to the taxation of their worldwide income and gains. We covered the topics of dual contracts, and residence and domicile. This week, we&#8217;ll launch into split year treatment, employee [&hellip;]<\/p>\n","protected":false},"author":48,"featured_media":30519,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","inline_featured_image":false,"footnotes":""},"categories":[14278,133],"tags":[8816,8848,6919,10307],"usecases":[13704],"businesstypes":[],"country":[],"class_list":["post-30431","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-management","category-startup","tag-foreign-employment","tag-tax-rules","tag-uk","tag-z-syndicate","usecases-hire-a-new-employee"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.8 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Tax Rules for Foreign Employment in the UK: Part 2 | Zegal Hong Kong<\/title>\n<meta name=\"description\" content=\"Tax requirements, whether as an employer or employee, can be complicated. 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Understanding options like split year treatment can save your bacon come tax time\" \/>\n<meta property=\"og:url\" content=\"https:\/\/zegal.com\/en-hk\/blog\/post\/tax-rules-for-foreign-employment-in-the-uk-part-2\/\" \/>\n<meta property=\"og:site_name\" content=\"Zegal Hong Kong\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/getzegal\/\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-30T01:32:48+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-18T05:52:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/zegal.com\/wp-content\/uploads\/2019\/09\/adventure-blur-cartography-408503-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"5400\" \/>\n\t<meta property=\"og:image:height\" content=\"3604\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Terri Schofield\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@getzegal\" \/>\n<meta name=\"twitter:site\" content=\"@getzegal\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Terri Schofield\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/\"},\"author\":{\"name\":\"Terri Schofield\",\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/#\\\/schema\\\/person\\\/5ed984e170d66f7eebff26f1d45e15e8\"},\"headline\":\"Tax Rules for Foreign Employment in the UK: Part 2\",\"datePublished\":\"2019-09-30T01:32:48+00:00\",\"dateModified\":\"2023-01-18T05:52:54+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/\"},\"wordCount\":807,\"publisher\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/zegal.com\\\/wp-content\\\/uploads\\\/2019\\\/09\\\/adventure-blur-cartography-408503-scaled.jpg\",\"keywords\":[\"foreign employment\",\"tax rules\",\"UK\",\"z-syndicate\"],\"articleSection\":[\"Business Management\",\"Startup\"],\"inLanguage\":\"en-HK\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/\",\"url\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/\",\"name\":\"Tax Rules for Foreign Employment in the UK: Part 2 | Zegal Hong Kong\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/zegal.com\\\/en-hk\\\/blog\\\/post\\\/tax-rules-for-foreign-employment-in-the-uk-part-2\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/zegal.com\\\/wp-content\\\/uploads\\\/2019\\\/09\\\/adventure-blur-cartography-408503-scaled.jpg\",\"datePublished\":\"2019-09-30T01:32:48+00:00\",\"dateModified\":\"2023-01-18T05:52:54+00:00\",\"description\":\"Tax requirements, whether as an employer or employee, can be complicated. 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