If you are classed as being non domiciled for tax purposes or sent to the UK to work under a secondment you could qualify for a tax rebate.
It only takes some knowledge and a bit of planning to make sure you benefit from all the legitimate UK tax allowances and reliefs. The UK Tax Office (Her Majesty’s Revenue and Customs, HMRC) consider each taxpayer’s financial situation on an individual basis. You need to apply the information below to your employment circumstances to calculate how much tax you could save.
‘Fixed term’ project in the UK, for no longer than 24 months
It’s quite common for people to be sent to the UK to work under a secondment by their employers. HMRC call this ‘temporary workplace relief’ or ‘detached duty’ because your employer has assigned you to a temporary workplace for a specific amount of time. The UK tax office allows income tax relief for some of the inevitable costs to the taxpayer in this situation, including:
- Subsistence – food, drinks
- Accommodation (+essential bills) – within HMRC’s definition of “reasonable”
- Travel – to the temporary workplace
Qualifying criteria include the length of the assignment being a maximum of 24 months and that you are still employed by the same employer. In addition your employer has to be from outside the UK and remains the same during your stay in the UK, instead of offices in your home country. It does not apply to the expenses of the employee’s family, only the employee.
Business Travel outside the UK when non domiciled
You are entitled to claim exemption from UK tax on income that you earn while working outside the UK; if you have paid at least the equivalent amount in another country. This applies from the year you arrive and for the following two tax years. If this relates to your employment circumstances, then it is advised that you have a non-UK bank account for your net pay. This should only be a joint account if your spouse does not use it for their income. You could open an offshore account in the Isle of Man or the Channel Islands, if you work for a UK employer.
Social Security Payments
In the UK, these are called National Insurance Contributions (NICs). Your liability to pay NICs is depends on whether or not your home country has an agreement with the UK government.
- European Economic Area – EEA countries have the option of continuing social security payments in their home countries and therefore being exempt from UK NICs. This only applies to temporary work placements or if you frequently work in more than one EEA country during a tax year.
- Reciprocal agreements – other countries outside the EEA may have a similar agreement with the UK, such as Japan and USA. But they might have more restrictive terms.
- No agreement – if your home country does not have a standing agreement with the UK, then you will be expected to pay UK NICs. Sometimes they don’t start until you have been in the UK for 52 weeks.
Travel Home
This is a great tax relief entitlement. It is possible to get tax relief on flights home from the UK when you hold an indefinite or fixed-term contract to work in the UK. It applies from the date you arrive in the UK and for the following 5 years and there’s no ceiling on the number of flights. Not only does this apply to the employee, but you are also entitled to claim 2 return flights per year for your children and spouse.
