COVID-19  •  Analyses & Studies

Change in working arrangements due to Coronavirus: The impact on UK reporting

Vanesha Kistoo, Director at Blick Rothenberg, have put together a Q&A for the French Chamber, to answer some tax related queries about working from home and repatriation.

I am having to work from home in the UK. What does this mean for me and my employer?

UK Income Tax will likely be due on the time spent performing duties in the UK, even if you are working from home. The key steps to consider are:

  • Should your employer operate a payroll in the UK?
  • If you are liable to income tax overseas on the same income, how can you claim tax relief and when? Does the timing mean a cashflow issue for you?
  • What about your social security contributions?

I am due to leave the UK to start an assignment in The Netherlands on 1st April 2020. From this date I will be paid by the Dutch entity even if I am not able to physically move to The Netherlands. Will I need to pay tax in the UK on the income I receive from 1st April if I am not able to leave the UK?

Under current rules, you would be liable to UK income tax on duties performed in the UK. It is unclear at this stage whether any relaxation will be introduced to address such issues, especially when it results in an individual being worse off because they need to pay tax at a higher rate of tax.

I am a senior executive of a non-UK company who is working from home in the UK. Does my employer need to pay tax in the UK?

Potentially, your activities may trigger a corporate presence for your overseas employer. This could mean your employer being required to register in the UK, file corporate tax returns and potentially pay UK Corporate Tax on any profit deemed to be generated in the UK. If your your activities in the UK last for a short period of time, e.g. 1 month, the risk would normally be low. We recommend keeping a good record of duties performed in the UK e.g. time spent (days, hours) and to keep an eye on the changes that the government introduce.

I have been non-resident in the UK for several years. I had to come to the UK to be with my parents. I don’t know when I will be able to leave the UK. Will I become resident in the UK?

Maybe, when counting days to determine your UK residence position, up to a maximum of 60 days will be disregarded as ‘exceptional’ if you:

  • are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
  • find yourself advised by official Government advice not to travel from the UK as a result of the virus
  • are unable to leave the UK as a result of the closure of international borders, or
  • are asked by your employer to return to the UK temporarily as a result of the virus

We understand that HMRC are considering additional relaxations.

We had to move some of our employees to a location where they do not normally work. What should we do?

Most jurisdictions are introducing relaxations, these may help mitigate some, if not all complexities and reporting obligations. Find out where all your employees are working from and track how many days they are/expect to spend working outside their normal workplace. You will need this information to review the tax obligations as the longer there are travel restrictions, the more likely it is that employees are going to trigger tax obligations in locations where they do not normally work.

Do we need to review the social security position for all our expats?

Not all, those who are on a secondment arrangement should be fine. However, those who have a multi-state working agreement may be impacted. This is because the actual time spent working in a location can lead to a change in which Member state rules will apply. Therefore, please review the social security position for employees who have a multi-state agreement in place. Some countries have introduced relaxations, e.g. The Netherlands. More may follow.

Are there other aspects to consider?

If an employee is receiving additional compensation to compensate for the ‘hardship’, there may be additional tax implications to consider. Equally, there may be tax reliefs available to help alleviate any additional taxes.

Vanesha Kistoo, Director at Blick Rothenberg, a tax, accounting and business advisory firm that puts people and client relationships first. The firm is currently giving advice on how to plan and respond to the Coronavirus situation. Please check out their Hub.

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