Tax breaks for expats working in the UK

If your company is planning to second employees from an overseas associated company, significant tax breaks could be available under the UK tax rules for temporary workplace and overseas workday reliefs.

Under the temporary workplace relief (TWR) rules, where an employee is seconded from a permanent workplace to a temporary workplace for a period not exceeding 24 months, accommodation and other living expenses can be provided by the employer free of tax and NIC.  This can cover secondments from abroad as well as within the UK, and provide significant savings in the cost to the employer of the employment package as well as reduced tax liabilities for the employee.  Deductible UK living expenses can include rent, utilities, council tax, household goods, local travel, meals and food.

Overseas workday relief (OWR) can benefit secondees to the UK who are required to work some of their time outside the UK, since the overseas workday proportion of their remuneration can be free of UK tax if certain conditions are satisfied.  Previously the employee had to be “not ordinarily resident” in the UK, which in practice meant that OWR was available for the first 3 years.  Under the new statutory residence rules effective from 6 April 2013, the concept of ordinary residence has been abolished, but OWR is still available provided that the individual is not UK-domiciled and has previously been non-resident for a consecutive period of 3 years.  Another important condition is that the overseas workday proportion of remuneration must be paid to the employee outside the UK and not remitted to the UK.  The employer can arrange with HMRC for OWR to be given through PAYE on an estimated basis pending final relief through the employee’s personal tax return.

For further information/advice on this subject please contact Ward Williams:

01932 830664  · www.wardwilliams.co.uk ·  enquiries@wardwilliams.co.uk