New working arrangements – could you have inadvertently changed your tax residence?

Since April 2021 almost 800,000 employees have been working from home as a result of the pandemic and, as we move into the 2023/24 tax year, many employees have begun to integrate home working into their everyday lifestyle. As we can work anywhere in the UK, so too we can work overseas.  Many of us […]

Since April 2021 almost 800,000 employees have been working from home as a result of the pandemic and, as we move into the 2023/24 tax year, many employees have begun to integrate home working into their everyday lifestyle.

As we can work anywhere in the UK, so too we can work overseas.  Many of us may have family overseas or second homes where we can set up base, either as part of a permanent move or as a way to split time between the UK and perhaps a warmer climate.

Long-term presence in a country would certainly trigger payroll, social security and corporate tax obligations, but in the shorter term how do you address the activity undertaken to ensure you do not become liable to tax locally and ensure you meet all your tax obligations?

If you become resident overseas and come into the UK for work on an ad hoc basis (to attend meetings for example), do you trigger any tax implications here or abroad?

Whilst a director is an employee for tax purposes, double tax treaties generally do not offer non-resident directors protection from UK tax when they work in the UK.  Due to this lack of protection from UK tax in the treaties many non-resident directors are excluded from utilising the PAYE relaxations that might be available to inbound employees and short-term business visitors from overseas.

What is the tax position if you spend time both in the UK and overseas?  What is the minimum number of days needed to create a taxable presence here in the UK?

Looking at where you are resident for tax purposes can be very complex.  How you are subject to tax and National Insurance can depend on your role in the business as well as your lifestyle and how many days you spend in a country.

It is important that, as we navigate the world, we are mindful of our tax footprint and ensure we understand where we are resident for tax purposes and avoid any nasty surprises.

Please contact Diane Nettleton at 01633 653167 or diane.nettleton@kilsbywilliams.com should you wish to discuss statutory residence for yourself or your employees in more detail.

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