The remote workforce – is your business complying with its tax obligations?

With employees increasingly able to work from almost anywhere in the world, all employers should be reviewing the policies they have in place to ensure that they remain compliant from a UK tax and National Insurance perspective. Businesses should also check that they have complied with any overseas obligations which they may not have previously had to fulfil.

The tax rules

The tax rules on areas like travel and subsistence are a prime area to review, taking stock where working practices have changed post-Covid. Particularly important is the concept of ‘permanent workplace’, something that has specific meaning in tax law. It has a direct bearing on the allowability of travel expenses.

If employees are working remotely or in a hybrid arrangement, where they work both on site and at home, special care is needed: tax relief for travel from home to the employer’s premises will be available only in very limited and specific circumstances. In most cases, HMRC will hold that the employer’s normal workplace is the permanent workplace. Where this is so, the ordinary commuting rules work to deny tax relief.

Expenses

The position regarding home working expenses and employer provided equipment is another area to check. A number of easements applied specifically during the pandemic, such as the working from home allowance commonly claimed by many employees who worked at home for all or part of the week during the pandemic, and we recommend taking the opportunity to engage with staff now to make sure that expectations are set at a realistic level and that any allowances and reliefs being given remain correct.

Cross-border working

There has also been a significant increase in cross border working, where employees work overseas for employers based in the UK, or work in the UK for overseas employers. Historically, these arrangements would be managed under expatriate assignments which were generally for a set period of time however arrangements are now much more hybrid and may typically involve an individual working in two or more countries, often in residential accommodation, where the location is chosen by the employee and not by the employer.

Employers potentially need to deal with many different issues arising here. They range from where someone is considered resident for tax purposes, to consideration of what are called double tax treaties – treaties between the UK and other countries establishing how an individual is taxed. Areas like share schemes and pension contributions also require appropriate attention.

Get in touch

Whether your employees are internationally mobile, or footloose within the UK, there’s a lot of complexity to take on board. At Rayner Essex our UK tax experts can provide advice specific to your business and should you require advice in an overseas jurisdiction we can also put you in contact with an international advisor through our INPACT Global network of global accountancy and tax advisory firms.