Know your obligations when sending employees to work overseas

21 August 2017

In this blog post our Scunthorpe accountants explore areas to look into when considering sending employees overseas to work.

There are many benefits to sending sending employees to work overseas. For them, they get to experience a different lifestyle and culture while learning and sharing skills. For you, you get to send the right people for the job you need doing and have eyes on the ground, without having to hire and train someone else.

It all looks and sounds great on paper and everyone's embracing the idea, but you could get tripped up by the obligations you must meet, and both you and your employee might miss out on a few tax benefits which wouldn't normally apply.


Obligations when sending employees to work overseas:

Class 1 National Insurance

If your employees normally live in the UK and pay class 1 NICs towards their vital pension fund, they and you still need to continue paying contributions for 52 weeks after their departure. In countries where there's a reciprocal agreement in place, if the social security payments are more cost effective, it could be worth taking that route.


Save money with a tax equalisation program

Sometimes your staff may go overseas for short contracts. This means they're still governed by UK tax laws and are liable for associated taxes. But businesses with a tax equalisation program in place may be able to reimburse travel, food and accommodation costs and provide them tax free.

Global economies are volatile right now. Tax equalisation schemes can also offer protection to people working overseas for longer periods. Potential tax differences imposed by foreign governments can unnerve your employees because they don't know what their take-home salary will be. The scheme's goal is to eliminate the issue by guaranteeing a net salary.


Tax refunds

These are two words any employer and employee like to hear. Once your workers are based overseas for more than a full tax year and become an expat, they could be eligible for the entire tax band refund amount.


Forget PAYE

Also after a year working overseas at your foreign branch, qualifying employees can be paid outside your PAYE system. To qualify, they must meet obligations such as limiting the time they spend visiting the UK.


Potential pitfalls in sending employees to work overseas

Sending employees overseas to work is supposed be a positive time for everyone. There's lots to look forward to. However, UK legislation is changing faster than most of us have witnessed before, and Britain is losing its power to influence how foreign countries form theirs.

Things like share plans are a great example of where tax treaties serve a valuable purpose, while other obligations include being prepared for PAYE tax audits, planning to replace secondments and contracts with local people, plus considering sombre issues like repatriation.


Business Advice Scunthorpe

Yes, there's lots to think about when sending employees overseas to work, but you didn't get this far on merit alone. With a little help, you can get back to looking forward to conquering the world. If you are sending employees to work overseas, Haines Watts Scunthorpe can help ensure that you comply with your employer obligations and save the company money. If you would like one of our Scunthorpe accountants to assist you then please speak to us to obtain a quotation for this work.