The UK Payroll Implications of International Travel to and from the UK

Companies who have employees who undertake international business travel have to consider a number of implications of such travel and one that is quite often ignored is the UK payroll responsibilities, especially if the travel is ad hoc and not under a formal assignment programme.

If an employer who sends an employee either to or from the UK ignores the UK payroll reporting requirements they do so at their peril.

Let’s first consider someone coming to UK

When an employer sends one of their employees to the UK to undertake work, whether it is for just one day or for a formal assignment period, they need to do something with regard to reporting this to HMRC.

What that reporting looks like depends on the circumstances of each particular case and will be affected by such things as:

• Amount of time spent in UK?
• What country the employee come from?
• The nationality and tax residence of the employee concerned?
• What duties they fulfil whilst in UK?
• Who pays them?
• Who ultimately bears the cost of that pay?
• Who ultimately pays the UK tax, if any is due?
• What type of work they undertake whilst here?

The answers to the above questions will give the employer an indication of the type and level of reporting that is required and whether UK tax will be due, but, in every case, some level of reporting is required, even if it is assumed that no tax is due.

HMRC provides a number of options under which the employer can report the necessary information and pay over any taxes due, but it’s important is to understand which option is suitable given the circumstances and what the employer needs to do to meet their UK reporting obligation.

As a fundamental requirement, the employer needs to be able to track each employees’ time spent in the UK as this is key to establishing the level of reporting required and tax due. They also need to be able to provide details of earnings, but as the assumption is that these employees are on a payroll somewhere, this should not be insurmountable, the UK travel data is much more difficult to keep track of.

Armed with all the answers to the above questions the employer is now in a position to determine what their reporting obligation is and they are in a position to meet that obligation.

Let’s now look at the situation where the employee is sent overseas

You would imagine that sending someone abroad from the UK would be more straightforward, a case of ‘out of sight out of mind’. If only that was the case, even when someone leaves the UK there may still be an ongoing tax and national insurance liability after their departure from these shores. Furthermore, even if their ongoing tax liability stops at that point, residual UK tax and NI liabilities are still likely to be due on any annual and longer-term awards due after that departure, but which relate, at least in part to the time before they left the UK, if nothing else.

Just because a UK employee is working abroad does not preclude the employer’s obligation to continue to report their earnings and for UK tax and NI to be paid. To avoid UK tax an employee would normally need to be living and working abroad for a period that includes at least one complete tax year, which means, depending on when they leave, anywhere between one year and one day to two years.

Shaking off national insurance, especially for someone on assignment overseas, is even more difficult, as it is dependent on where they have been assigned and what social security agreement the UK may have with that location. Furthermore, being able to stay in the UK social security system may avoid a liability to a higher host location social security regime.

How can we help?

We at Harbour HR are well placed to work with businesses who send people to and from the UK to:

• Assess what their reporting obligations are
• Help them apply for the necessary reporting arrangements with HMRC
• Administer such arrangements on their behalf

We can help with understanding the UK reporting obligations an employer has, whether it’s for:

• Short term assignees
• Long term assignees
• Commuters
• Short term business visitors
• Permanent relocates

If any of these scenarios apply to your employees, and you are uncertain what your UK reporting obligations are, please contact us and we can set up a meeting to discuss the situation with you.