Are you a UK employer with staff visiting the UK on business trips from overseas offices within your group?
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.
In addition, careful consideration must be given to the types of duties the individual is carrying out whilst in the UK. Anything that is regarded as substantive by HMRC will be taxable in the UK and the individual will not be able to use the agreement.
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.
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.
UK National Insurance (Social Security)
There is a separate network of treaties that relate to social security and advice should be sought depending on the countries involved. However, broadly, if an individual is travelling from a country with which the UK has a social security agreement, a certificate of coverage should be in place to ensure that the individual can remain in their home country social security system and not be liable for UK social security.
How do I obtain an Agreement?
We are happy to discuss your business needs and assist with the relevant application to HMRC as well as helping you to monitor your visitors throughout the year. We can work with you to help ensure your company is compliant in this area of global mobility.