Employee working remotely for an English company

There are various layers to this specific issue, some of which are discussed below:

• Taxation and social insurance

• Immigration rules

• Data protection

• Insurance and benefits

• Health and Safety

In this article, we will briefly discuss taxation and social insurance since the other topics would be most appropriately discussed with a specialised legal advisor.

It is important to note that there is slight difference if the employee is also the director-shareholder of the company or he\she is employee in someone else’s company. The main difference is that the shareholder can be more flexible in managing the working relationship with their own company. Therefore, someone who is the shareholder, director as well as employee of their own company can easily decide on topics such as data protection, insurance, health etc.

It is also important to mention that the country from which you work is also taken into consideration because there are certain tax treaties and agreements between the UK and the country you work from, based on which the taxation issues of the working relationship are defined. One example is the agreement between countries to avoid double taxation.

If such an agreement exists, the relationship between employee and the company, taxation and social insurance are easily defined. The main issues would be whether you work remotely on a permanent or temporary basis and whether you are a domicile British citizen or not. In most cases the employees are non-British working remotely from abroad. We will discuss this case because this working relationship tends to be more and more permanent.

THE APPROACH

Employees who spend most of their time abroad for a period of one year or more may be eligible to be excluded from taxation in the UK for their income. You would need to fill in the P85 form and send it to the HMRC so you can receive the relevant tax code as confirmation.

IMPORTANT: You will need to contact the authorities in the country where the employee is a permanent resident and receive information about whether and how the relevant tax and insurance deductions are to be managed. There are countries where these deductions are managed by the company while in other countries the employees themselves have to declare them at the end of every tax year. You are advised to consult specialists of the country you are interested in.

If the employee is leaving England, they need to notify HMRC so that the procedures related to tax and insurance deductions can be confirmed. Generally speaking, the procedure remains as normal at first (taxes and social insurance deductions are made based on your tax code).

If the employee has started a company in England but has never came into the country, then he/she is taxed in the country of residence and therefore the relevant deductions do not apply. In this case, the employee’s tax code is T0 or NT (please confirm with HMRC) and pays the taxes in the country of residence. For further details regarding the procedures, please consult a professional accountant in the country you pay your taxes (where you are a tax resident).

For further details and individual advice, please arrange for an online consultation.

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Translated / Edited: Apostolia Nestoratou

© 2021 UPECO LTD

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ATTENTION!

This article intends to give only a general informative picture and should not, in any case, be taken as a rule. It is strongly recommended to seek a full and professional guidance specifically for your circumstances before making any decisions.