It pays to plan ahead when it comes to a global workforce
A growing number of businesses worldwide are enjoying an increase in cross border trading. With this we have seen an increase in the number of internationally mobile employees.
Of course this is not a new development in Northern Ireland, with many companies operating across the UK and Irish border (and further afield) for years and this trend is likely to continue.
While the opportunities arising from having an internationally mobile workforce are immense, tax and social security costs in the various jurisdictions can be prohibitive. But pre-emptive tax planning can minimise the impact on local businesses.
In our experience, the best way to manage an internationally mobile workforce is to plan early, taking into consideration the following three steps to success.
Businesses should have an international mobility policy. This will align international assignments with the company’s strategy and business goals. It is important to consider financial implications at this stage, for example an employee’s remuneration package.
Tax implications should be considered. Each jurisdiction has its own rules, which should be complied with before sending employees overseas.
For example, when an overseas employee comes to work in the UK, PAYE obligations arise from the day they arrive. In our experience, many employers don’t know this and are not operating payroll correctly on overseas workers.
A good idea is to apply to HMRC for a Short Term Business Visitor Agreement. This can relax the payroll obligations for employees coming to the UK for up to 183 days (provided certain conditions are met). This should reduce the UK tax and administrative burden for employers.
Social security obligations must also be considered. Generally, workers on a temporary assignment should only pay social security in their home country; but if the correct applications are not made, social security charges may arise in both countries.
Tax reliefs for overseas workers coming to the UK are also available. For example, travel costs may be exempt from tax. Businesses should make the most of these reliefs, as they offer savings and can help attract employees.
Communicate the policy and support overseas workers. It is in the business’ best interests to ensure that employees are fully engaged and adding optimum value to the project. Employees should not be worried about their tax or residency position, and instead remain focused on the task in hand.
For further information Kelly Moorcroft can be contacted at firstname.lastname@example.org Grant Thornton (NI) LLP specialises in audit, tax and advisory services