Tax Insight: Short Term Business Visitors
Read time: 3 mins
Service: UK organisations that have employees from overseas group companies coming to the UK for work purposes need to ensure that they are compliant with UK tax rules.
Strictly, UK income tax and National Insurance should be withheld from earnings for each day an individual spends working in the UK. However, it is possible to apply to HMRC for an agreement that tax and NIC are not due under Treaty rules, or alternatively acknowledge that tax is due but run a special annual payroll to capture the remuneration of all visitors rather than adding and removing people every month according to whether or not they visit the UK.
Short-Term Business Visitor Agreements
A Short Term Business Visitors Agreement (STBV) offers an alternative to a company’s tax withholding obligations under PAYE. Under this agreement an employer does not have to operate PAYE for certain categories of employee however in entering into the agreement, the employer agrees to certain recording and reporting obligations.When can you use a STBV?
To qualify under the agreement employees must be:- Resident in a country with which the UK has a double tax agreement that covers employment income
- Coming to work in the UK for a UK company or a UK branch of an overseas company
- Expected to stay in the UK for 183 days or less in any 12-month period, and where
- The UK company or branch will not ultimately bear the cost of their remuneration.
What are the recording and reporting requirements?
One of the conditions of the STBV Agreement is that an employer tracks their employees and keeps a record of the number of days spent in the UK – both for work and leisure purposes. Employees are expected to periodically report days spent in the UK on business to a central administrative point.In addition, the longer an individual spends in the UK, the more details the company needs to provide to HMRC in the end of year report.
Non-Treaty Countries
Where there is no tax treaty between the UK and the country the business visitors are tax resident HMRC have introduced an agreement whereby visitors to the UK who spend less than 60 days can be captured on an annual payroll, run at the end of the tax year and the tax paid over by 31 May following the end of the tax year.This agreement can also be used where the treaty cannot be applied such as in circumstances where the costs are borne by the UK entity or where individuals come from an overseas branch of a UK employer.
It should be noted that Non Resident Directors of UK companies cannot use either the STBV arrangement or the Annual Payroll arrangement.