International relocation
Transcript of International relocation
International RelocationMoving people into the UKGill SalmonsTax Manager, Baker Tilly
Agenda
Temporary or permanent move?
Relocation package
UK tax effects and considerations
Permanent move
• £8,000 reimbursed expenses over two tax years
• No relief for expenses borne personally
For example: Move between two distant worklocations for same employer; moving costs not a benefit if employer pays them (up to £8,000) but not deductible if employee pays.
Temporary move
• £8,000 relocation expenses may be available, depending on assignment length
• Other relief may be available for travel expenses, accommodation and utilities, commuting costs, food
• 24 month limit for some deductions
Temporary move (contd.)
Temporary expenses no longer deductible when assignment known to extend beyond 24 months
May be challenged if it happens regularly that individuals’ stays frequently exceed the 24 month limit
24 months intention
• Demonstrable via written or oral agreements
• Consider length of project
• Consider normal pattern of assignments
• Purchase of property by individual unhelpful
Comparison
Over 24 months
“Permanent workplace” for UK tax purposes
Relocation expenses only tax-free up to £8,000
Initial travel to new location also not taxable in the UK
Up to 24 months
“Temporary workplace” for UK tax purposes
Deductions for accommodation, some food, commuting costs
Not a benefit if paid by employer/deductible if paid by employee
Expat assignments
Payroll requirements and forms
• Need to be on a UK payroll if in the UK for >30 days• P46(expat) to be completed• Up to £6,475 of package may be free of UK tax but many conditions• P11D forms due for assignees provided with benefits
Social security
• Eg. Certificate of coverage, A1 (old E101)
Tax returns
Types of package
Form of payment – localised, equalised, tax-protected
Local hire
• Assignee on local terms in host country but right to return
Tax-equalised
• Assignee pays tax at the same level as if still in home country
Tax-protected
• Assignee pays the lower of home and host country tax
Overseas workdays relief
Stay of less than 3 years
Non-UK workdays while on assignment
Paid offshore and income kept outside the UK
Segregate bank accounts
Company Considerations
•Double tax treaties and the effects of recharging
•Dispensation update may be required
• Are assignees covered by your dispensation?
•UK vs offshore payments
•Transfer pricing
Any Questions?
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Gill Salmons +44 (0)1483 307000 [email protected] www.bakertilly.co.uk
Natascha Clark+44 (0)1256 313839 HCR Groupwww.hcr.co.uk
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