AIBU. Work from home at overseas and not paying taxes in the UK!

[milnelucy]

I saw some of my colleagues take the work from home advantage because most like we will work from home till March 2022. Some of them moved back to Europe and one of them moved back to India and work from home. I heard they can avoid paying the income tax in the UK because they have not been in the UK for more than 180 days. I don't fair to us. I feel that is not fair to us. Am I being unreasonable?

What's fair and what's legal are not always the same.

However, do your employers know? There are potentially legal implications for them- our contracts specify that employees must be resident in UK and payment made into UK bank account.

There can be huge tax implications for the company so they're foolish if they allow it without giving it proper consideration, and absolutely stupid if they haven't put steps in place to make sure they know where their employees are working from.

I'm originally from another European country and if I did this, I would end up having to pay more tax because tax rates in my native country are higher than they are in the UK. There are agreements between the countries so you are not double taxed in the UK at the same time which is of course fair enough.

Plenty of people don't pay taxes OP, my dh doesn't pay any as he is out of the country for more than half the year. It's just the way it is.

If they aren’t using any services in the U.K. then why should they? If they’re in another country then they won’t be using the NHS, roads, bins, emergency services etc etc etc

But are they not paying taxes in the country they live in instead? They generally should be.

@helpfulperson

But are they not paying taxes in the country they live in instead? They generally should be.

Yup. They are paying taxes in the country they live in. I think is very low (like India) compare to the UK. I don't think is fair (our countries have less income from tax)

But OP, if they don't live here they are also not using any tax payer funded services.

Comparison is the thief of joy.

That’s really not possible unless they are self employed op. Even if you break residence in the uk, and that’s very hard to do, you still have a tax burden. No one breaks residence by being out the country three months.

@Bluntness100

That’s really not possible unless they are self employed op. Even if you break residence in the uk, and that’s very hard to do, you still have a tax burden. No one breaks residence by being out the country three months.

Some of them out of the countries since Jan 2020. And coming back around mid-Sept and leave again in November 2020

As I have said my dh and his co workers are U.K. residents and they don't pay tax on earnings due to being out of the country for the allowed days...it's just the way it is. They spend the rest of the year in the U.K.

If not using uk services then why should they pay uk taxes.

Why does it matter to you? How does it affect your life where others choose to live? If the work is being done, does it matter where they are physically situated while doing it?

Good for them, I say. Nothing to do with tax but for making the most of the opportunity to live elsewhere for a time. You say 'back', so it sounds like they are living where they are originally from anyway.

@wallysally

Plenty of people don't pay taxes OP, my dh doesn't pay any as he is out of the country for more than half the year. It's just the way it is.

He should be taxed on the income somewhere, even if not tax resident in the UK.

Are they working from home abroad but affiliated to a local office abroad on
local terms and conditions, including local pay? That would be allowed at my international company. What wouldn’t be allowed is working abroad while still being employed by the U.K. office, due to complicated tax reasons.

@wallysally

As I have said my dh and his co workers are U.K. residents and they don't pay tax on earnings due to being out of the country for the allowed days...it's just the way it is. They spend the rest of the year in the U.K.

You seem overly proud of your tax dodging DH. Or are you trying to get someone to bite?

As well as the tax implicatipns for the individual, the employer which allows this may well be exposing themselves to overseas tax implications (e.g. equivalent of employer's NI in other countries, the requirement to run an overseas payroll, make certain filings overseas etc.). I think a lot of employers aren't yet wise to the potential implications and will start reining it in when they realise.

Many multinational employers have teams dedicated to ensuring that the tax and filing requirements of globally mobile employees are addressed, but it tends to be senior and highly skilled people they do this for. It's not worth the trouble for roles where the individual is easily replaceable.

I don't think what you say is correct. I'm heavily involved in tax & HR advice in my role and this is something we've looked at extensively in the past year.
If an employee is employed by a UK company their salary will be subject to the usual deductions, PAYE and NICs, each month and these will be deducted at source by the employer. The employee receives the net amount.
There is no ability for an employee to leave the UK and then refuse to pay the usual deductions. The only way to do it is to move the employee from their UK contract to a local contract (only feasible if it's an international company with a presence in the employee's new location). The local contract will be subject to the local tax regime. This scenario is usually very unattractive to employees because a local salary in, say, Spain will be vastly less than their existing London salary (and the tax will be higher!)
Some employees have disappeared off to other countries during covid WFH but continued on their UK contract and associated tax etc. This doesn't create a problem with HMRC because they're still getting their contributions but does potentially create a permanent establishment risk for the employer in the country the employee has gone to. This has tax implications which vary in severity depending on the host country. Only other risk to the employer is the employee acquiring employment rights in the host country but that's not usually too high risk.
Risk to the employee is having to pay local taxes on top of UK taxes. This can be substantial.

Seafarers who work outside of U.K. seas for a certain amount of time can claim tax back on 100% of earnings...that is the way it is.

@BlackboardMonitorVimes it's not tax dodging it's the rules that have been there for quite a long time.

My employer has it written in our contract that we need to reside in the UK. I don’t know how it all works but due to the tax implications for them?
A few people had traveled home during 2020. A few people handed their notice in as they found jobs in their home country.

They are flexible with wfh so when someone did travel to another country they allowed them to work any isolation period as ‘WFH’ then they took holiday but the expectation was then they returned to UK. For example a French colleague travelled home worked the 10 days then had 2 weeks holiday then returned to UK.

Untwist your knickers. They have to be outside the U.K. for a whole tax year (April - April) before they’re exempt. And even then, there’s a good chance they won’t be if the are habitually resident in the U.K. and are being paid from a U.K. company into a U.K. bank account.

If the employer runs PAYE, then they'll have to know. It would also be unwise to have gaps in your NICs, though you can move those to class 2 so they solely preserve the long term benefits.

@CSJobseeker

As well as the tax implicatipns for the individual, the employer which allows this may well be exposing themselves to overseas tax implications (e.g. equivalent of employer's NI in other countries, the requirement to run an overseas payroll, make certain filings overseas etc.). I think a lot of employers aren't yet wise to the potential implications and will start reining it in when they realise.

Many multinational employers have teams dedicated to ensuring that the tax and filing requirements of globally mobile employees are addressed, but it tends to be senior and highly skilled people they do this for. It's not worth the trouble for roles where the individual is easily replaceable.

They are contractors. So, they pay their own tax and etc...

[quote wallysally]@BlackboardMonitorVimes it's not tax dodging it's the rules that have been there for quite a long time. [/quote]
Ah yes, you want someone to bite. Sorry not going to.