UK tax when you have an overseas employer
If your employer is classed as a UK non resident for tax purposes this can affect your tax position.
UK resident employers must ensure that they arrange for tax and National Insurance contributions to be deducted from your wages, if you earn these and live in the UK. This is done through a scheme called Pay as you earn or PAYE.
How is it different if my employer is resident abroad?
If your employer resides abroad, then they are not obliged to participate in this system. But you are responsible for ensuring that you make your correct tax and National Insurance payments.
There are three different options available to non resident employers. For your peace of mind, it is worthwhile identifying which applies to your current employment situation. Then you can relax in the knowledge that you are meeting you tax and National Insurance obligations, either through your employer’s, or you own, arrangements.
Option 1 – Business-to-business arrangement
Usually, if another UK business gains from the work that you carry out, this business should arrange for your wages to be taxed. Thus for the purposes of taxation, they will be considered your employer. For example if you remain employed within another country, but have been sent to work in the UK, the UK employer will arrange the tax and National Insurance contributions. The two businesses will normally make an agreement to arrange this.
Option 2 – Employer arrangement
If being in the UK means that your business is running, in part, from the UK, then your employer must ensure your tax and National Insurance Contributions are made, despite them being abroad. This might be the case if you are a senior employee of a company, for example.
Option 3 – You arrange to pay through self assessment
If your situation is neither of the two described above, you must fill in a UK tax return in order to pay your tax. This is done through the ‘Self Assessment process’. In order to pay your National Insurance Contributions, you may have to create a ‘dummy’ payroll scheme, whereby you make payments to HMRC four times a year.
How we can help you if you have an overseas employer
Still a bit confused? That’s totally understandable, the detail of UK tax regulations can be rather overwhelming. Our tax experts will untangle the definitions for you and accurately explain your personal circumstances, without any ‘tax-speak’.
We provide an individualised service to every client and ensure that their tax position is fully optimised. This includes submitting a tax rebate claim for any tax overpayment you may have made, when working in the UK. Many work expenses are eligible and your initial claim can be backdated for four tax years.
- Expat tax return guide
- Automatic overseas test (AOT)
- Split year treatment
- Sufficient ties test
- Dual residence
- Seafarers tax deduction
- Double taxation treaties
- Statutory residence test
- Non domicile
- Remittance and arising
- Temporary non residence
- What is a DT Individual Form?
- UK secondment tax relief
- Tax Refunds for Offshore Workers
- What is a P85?
- Non resident pension tax relief
- Foreign Service tax relief
- Overseas Workday relief guide
- What is HS302?
- What is a HS304?