If you are sending employees to work overseas, we can help ensure that you comply with your employer obligations and save the company money.
Here are some of the ways in which Xpatria can help you:
- PAYE - Did you know that if you send employees to work at your overseas operations you may be able to pay them without operating PAYE? To qualify, the employee must work full time overseas for more than a complete UK tax year, and there are restrictions on the number of days that employees can spend back in the UK.Xpatria can obtain agreement to PAYE exemption from HM Revenue & Customs on a case by case basis for your expat employees. And in some cases it’s possible to obtain blanket clearance to cover particular types of expat employee.
- Tax equalisation/protection - To ensure that expat employees focus on their job (and not on how much tax they’re paying), many companies operate tax equalisation or protection programmes. These schemes operate in various ways, but their main aim is to ensure that expats receive a guaranteed net salary and benefits package, so that they can budget properly. The employer normally pays the expat’s host country taxes.We can guide you through the different methods of tax equalising or protecting your expat employees to determine what’s right for your company. Whether you’re considering implementing a new programme or whether you want to review your existing scheme, we can help. There is usually a cost to the employer for operating these schemes (which we can quantify for you) but many companies believe that this is offset by expats feeling secure about their tax position and consequently focusing on their new roles overseas.
- UK tax refunds - If your expat employees are working overseas for more than a complete UK tax year, they may be eligible for a tax refund in the year of their departure. This is because they are eligible for a full year’s tax bands, but they may only have received a few months’ worth of these in their PAYE withholding.We can calculate any refund, and complete and file the paperwork required to claim back the tax. Where expat employees are tax equalised, you give them the benefit of the full year’s tax bands in their net pay. Therefore, many employers ask their expat employees to direct any tax refunds in the year of departure back to them. Xpatria can assist you with these tax claims and with refund agreements with your expat employees.
- Tax free employer provided items - If you send UK staff overseas for less than a complete UK tax year, they will remain liable to UK tax. However, if you provide them with accommodation, and reimburse travel and subsistence costs, you may be able to give these items to your staff tax free. If the company operates a tax equalisation programme, this is a valuable tax saving, especially in high cost housing areas.We can claim these tax savings for you – retrospectively if required. We can also help you to reduce your reporting responsibilities on certain items by applying for P11D dispensations.
- Credits for overseas tax - If you send UK staff overseas for less than a complete UK tax year, they will remain liable to UK tax (see previous section). And these expat employees may not be able to avoid tax in the host country – and so pay tax twice. It’s usually possible to reduce the expat’s UK tax bill by the host country tax paid.Xpatria can help your employees claim all available overseas tax credits. We can obtain agreement from HM Revenue & Customs that you can deduct the overseas tax from each expat’s PAYE, thereby improving cash flow for your expat employees (or for you if they are tax equalised).
- Avoiding share plans nightmares – Do your expats participate in share plans whilst they are working overseas? Share plans are often taxed differently in the UK and the host country. The legislation in this area is complex and has changed frequently during the last few years. UK tax and resulting PAYE obligations usually hinge on where the expat is resident on grant, exercise and disposal of shares and share options, and on whether the UK has a tax treaty with the host country. So careful monitoring of expat movements and share plan events is important.Many employers choose not to tax equalise share plan income due to potentially enormous tax bills. However, you may still be obliged to withhold PAYE on certain share plan events and we can clarify your PAYE obligations so you are fully compliant. We can also help you to communicate potential tax charges to expat staff before they occur so that there are no unwelcome surprises.
- Social security - Many employees can continue to contribute to the UK National Insurance system whilst working overseas. This exempts both them and the company from paying social security contributions in the host country. Alternatively, if host country social security costs are low, you may prefer them to participate in the host country social security system.Xpatria can help you review the social security options available to you and your expat employees, and make the relevant social security applications for your employees to remain in the UK National Insurance system (where applicable). We gauge the cost of paying into each social security system for you and for your expats (both financially and in terms of benefit coverage for your expats).
- National Insurance - If expat employees remain in the National Insurance system whilst working overseas (see previous section), it’s possible to pay estimated employer’s Class 1 National Insurance on payments made to them overseas. This scheme gives you valuable time to collate details of accurate overseas payments and an extended year end filing deadline, so that you can ensure that National Insurance is operated correctly.Xpatria can enrol you on this scheme with HM Revenue & Customs and work with you and your overseas operations to ensure that appropriate payments are treated correctly. We ask the right questions so you can be sure that you are filing complete and accurate information.
- Employee departure briefings - When UK employees work overseas they need to declare their departure and their tax status to HM Revenue & Customs. It is important that they declare their tax status correctly, as mistakes can mean that both they and the company become ineligible for certain tax breaks.Xpatria can perform departure briefings with your expat employees and help them complete the relevant forms so that their tax status is accurate and they qualify for all available tax reliefs. We will file their UK tax status claim with HM Revenue & Customs and deal with any queries that they raise. During the briefing we discuss all applicable tax issues with the expat so that they are aware how they will be taxed whilst working overseas and know what records to keep. We can also take this opportunity to help them avoid UK tax on their overseas investment income and to ensure that they understand the tax implications of letting their UK home.
- Hassle free tax filing In addition to tax planning, we provide a friendly and efficient tax return service. Xpatria prepares your expat employees’ tax returns (claiming all appropriate tax reliefs) and calculates their tax liabilities. If you operate a tax equalisation programme, we will direct any tax refunds to you as appropriate. We always provide a written explanation of the tax return and our advisers are on hand to discuss the tax return if required. We will send your expats their tax return in pdf format and file it electronically with the UK tax authorities on their behalf. Our tax return service includes liaison with the UK tax authorities (if required).
- Reduced stress expat PAYE audits Tax audits are never entirely stress free, but if the UK tax authorities choose your expat population for audit, Xpatria will support you throughout this process. We will liaise with the HM Revenue & Customs on your behalf, attend any meetings with them and deal with any correspondence from them. We help to resolve tax audits promptly and fairly.
- Cost control - Have you evaluated your expat compensation and benefit packages? Do they deliver what you intended? Different categories of expat employees have different needs. How do you treat your short term, long term and commuter expats? How long does a secondment last before it becomes a local hire? What happens on repatriation? And on termination?Xpatria works with you to develop robust yet practical international assignment policies to support your expat staffing needs and help you control cost.
Xpatria provides a wide range of services to companies sending personnel to work overseas. Please contact us to obtain specific details of how we can help you. Why not take advantage of our free employer consultation service?