Expatriate Tax

April 2005

© Friend LLP 2005

People

• Denise Friend – Corporate Finance Partner

• William Dowsett – Personal Tax Manager

© Friend LLP 2005

Introduction to Friend LLP

• Founded in 1983 as Friend & Co Chartered Accountants

• First US Client in 1984

• We act for a number of overseas companies with interests in the UK

• We offer a broad range of professional advice and services

– Audit

– Corporate tax

– Corporate finance

– Personal Tax

– Expatriate Tax

• Providing a professional, personal and tailored service

• Ensure our services fit your needs rather than your needs fit our services

© Friend LLP 2005

1. Key assignment terms

2. Benefits

3. Potential pitfalls

4. Summary

Agenda

© Friend LLP 2005

1. Key assignment terms

Duration

• UK residence position

• < 2 years, 2 – 3 years or > 3 years

• Overseas residence position

Tax Equalise / Localise

• Dependent on length of assignment

• Tax equalisation usually fairest way

• Can work both in favour and against the company

• What income will be covered?

© Friend LLP 2005

1. Key assignment terms cont.

Payroll

• Remain on home country payroll?

• Assignments up to 5 years usually more beneficial.

• For UK payroll can operate an No Tax (NT) PAYE code

• Social security benefits

Social Security

• Certificate of Continuing Liability – (if employed by UK company)

• European Economic Area or Reciprocal Countries

• UK NI for up to 5 years

• Otherwise 52 weeks Class 1 NIC then no other obligation

• Overseas social security if employed by overseas company

© Friend LLP 2005

2. Benefits

• Accommodation

• Relocation costs

• Cost of living differences

• Education

• Company cars

• Medical benefits

• Orientation trip

• Tax advice

© Friend LLP 2005

3. Potential pitfalls

• No defined expatriate policy

• Confusion as to benefits included in package

• Individuals performance can suffer / less inclined to go on assignment

• Confused tax position can lead to Inland Revenue investigations e.g. PAYE inspection

• Additional cost

• No scope for tax planning

© Friend LLP 2005

4. Summary

• Planning ahead can greatly simplify matters

• Ensure company has defined expatriate policy

• Contact advisers in home and overseas country