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

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Gill Salmons +44 (0)1483 307000   gill.salmons@bakertilly.co.uk   www.bakertilly.co.uk 

                   Natascha Clark+44 (0)1256 313839 HCR Groupwww.hcr.co.uk

nclark@hcr.co.uk

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