Working overseas? Be aware of the tax implications

The pandemic triggered a seismic shift in working practices with remote and hybrid working become the norm at many UK businesses.

Even when a return to the traditional workplace became possible, it was evident many workers preferred a more flexible arrangement. Well-reported difficulties in recruitment and talent acquisition led many employers to accept flexible working requests.

It also became more commonplace for employers to allow workers to live and work overseas.

Whether these arrangements are temporary or long term, there are tax and legal implications for the employer and the employee working away from HQ.

The rules are extensive and it would be wise to seek advice before making the move.

Income tax

As well as paying UK tax, earnings can also be subject to income tax in the country where the employee physically works. Employers may therefore have obligations to report and collect tax for the overseas country.

Typically speaking:

  • If the employee works for six months or less, income duties may not be taxable overseas. However, the employer may have reporting obligations in the country overseas
  • Medium-term working abroad would see the income taxed in the UK – usually with a foreign tax credit – as well as being taxed by the overseas country
  • In the case of long-term working overseas – usually at least one UK tax year – the income would only be taxable in the overseas country

In some countries, a double taxation treaty exists that can override the local rules.

Social security

Social security contributions may also have local reporting requirements with employee and employer required to pay rates that can be much higher than in the UK.

There are some reciprocal social security agreements in place so advice should be taken to prevent issues in this area.

Corporation tax



Employers will also have to be wary of whether having an employee working abroad will create a “permanent establishment” in that country.

This would make a taxable presence that could render the employer subject to corporation tax in that country.

However, if the work location is not a fixed place of business, working from a home for example, and the overseas working arrangement is temporary, the risk of creating a “permanent establishment” would be low.

Need support or advice on this issue? We can help.

Support for customers needing extra tax help

Voluntary and community organisations will benefit from a £5.5m pot awarded by HM Revenue and Customs (HMRC) to support customers who may need extra help with their tax affairs.

HMRC is inviting eligible organisations to bid for the funding, worth £1.8 million a year from 2024 until 2027, through HMRC’s Voluntary and Community Sector Grant Funding programme. Bids can be submitted until 21 August 2023 with successful organisations being announced in October ready for the new funding to start from 1 April 2024.

This is the 12th round of funding HMRC is awarding as part of its commitment to help everyone get their tax right. The programme builds on more than a decade of partnership funding, worth in excess of £20 million.

HMRC’s commitment

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “We know that customers really value the trusted tax advice they receive from our voluntary and community sector partners. The funding programme is an important part in our commitment to support our hardest to reach customers and builds on the current support HMRC offers to those who may need extra help with their tax affairs.”

David Newbold, director of Sight Loss Advice Service, from RNIB, one of 12 organisations previously awarded under the grant programme said: “RNIB is extremely grateful to HMRC for its generous support, ensuring blind and partially sighted people can access the advice, information and practical help they need to deal with their tax affairs and HMRC.

“We’re proud to have HMRC as a partner, its contribution is vital to continue our important work in supporting vulnerable individuals.”

39,000 customers helped

In the past year alone, funded organisations have supported 39,000 customers over the phone, with face-to-face meetings and via email.

Successful organisations will receive funding to provide free advice and support to customers who:

  • may face barriers in understanding their tax obligations and claiming their entitlements.
  • are digitally excluded from accessing HMRC services.
  • have any other difficulty in interacting directly with HMRC.

As well as providing support to customers who may need extra help, organisations will provide valuable insight to improve HMRC’s understanding of customers in vulnerable circumstances. This will allow HMRC to reduce barriers and improve the customer experience when dealing with the department.

HMRC’s Voluntary and Community Sector Grant Funding programme complements the work of HMRC’s Extra Support Team, who are on hand to help customers whose health conditions or personal circumstances make contacting HMRC difficult.

More information on eligibility and how to apply can be found online at GOV.UK.

Tax Diary August/September 2023

1 August 2023 – Due date for corporation tax due for the year ended 31 October 2022.

19 August 2023 – PAYE and NIC deductions due for month ended 5 August 2023. (If you pay your tax electronically the due date is 22 August 2023)

19 August 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2023.

19 August 2023 – CIS tax deducted for the month ended 5 August 2023 is payable by today.

1 September 2023 – Due date for corporation tax due for the year ended 30 November 2022.

19 September 2023 – PAYE and NIC deductions due for month ended 5 September 2023. (If you pay your tax electronically the due date is 22 September 2023)

19 September 2023 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2023.

19 September 2023 – CIS tax deducted for the month ended 5 September 2023 is payable by today.

South Yorkshire first UK Investment Zone

It was announced as part of the Spring Budget 2023 measures that the government would establish twelve Investment Zones across the UK, subject to successful proposals. South Yorkshire has now been named as the first of the UK Investment Zones.

These Investment Zones are designed to encourage investment and new economic activity, supporting growth and jobs. The Investment Zones will benefit from lower taxes and more relaxed planning frameworks to encourage rapid development and business investment.

The new Investment Zone in South Yorkshire will specifically focus on Advanced Manufacturing. Sheffield, Rotherham, Doncaster and Barnsley all stand to benefit from an estimated 8,000 new jobs and £1.2 billion of private funding by 2030, which this Investment Zone will help to deliver. Boeing, Spirit AeroSystems, Loop Technology and the University of Sheffield Advanced Manufacturing Research Centre (AMRC) have partnered to support the first investment worth over £80 million.

The government is also working with the devolved administrations and local partners to deliver this opportunity to drive local growth in Scotland, Wales and Northern Ireland. There will be two Investment Zones in Scotland, with Glasgow City Region and North East of Scotland the most likely areas to host Investment Zones. Further information on Investment Zones in Wales and Northern Ireland is pending.

Alcohol duty changes

Changes in the way alcohol is taxed will come into effect from 1 August 2023. The new system of calculating alcohol duty for all alcoholic drinks will be made using standardised tax bands based on alcohol by volume (ABV). This will replace the current alcohol duty system, which consists of four separate taxes covering beer, cider, spirits and wine.

These changes are expected to make the system fairer and encourage more new products to enter the market. The new system will create six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

There will also be more help for the hospitality industry with an increase in the draught relief duty differential. This will reduce alcohol duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants. These changes will also take effect from 1 August 2023 and mean that individuals who drink draught products in on-trade venues (such as pubs) will pay less tax than on the equivalent non-draught product in off-trade venues (such as supermarkets).

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for eighteen months from 1 August 2023 until 1 February 2025.

Tax on savings interest

If you have taxable income of less than £17,570 in 2023-24 you will have no tax to pay on interest received. This figure is calculated by adding the £5,000 starting rate limit for savings (where 0% of the interest is taxable) to the current £12,570 personal allowance. However, it is important to note that if your total non-savings income exceeds £17,570 then the starting rate limit for savings is unavailable.

There is a tapered relief available if your non-savings income is between £12,570 and £17,570 whereby every £1 of non-savings income above a taxpayer's personal allowance reduces their starting rate for savings by £1.

There is also a Personal Savings Allowance (PSA) that can be beneficial to many savers. This allowance ensures that for basic-rate taxpayers the first £1,000 interest on savings income is tax-free. For higher-rate taxpayers the tax-free personal savings allowance is £500. Taxpayers paying the additional rate of tax on taxable income over £125,140 do not benefit from the PSA.

Interest from savings products such as ISA's and premium bond wins do not count towards the limit. So, taxpayers with tax-free accounts and higher savings can still continue to benefit from the relevant PSA limits.

Banks and building societies no longer deduct tax from bank account interest as a matter of course. Taxpayers who need to pay tax on savings income are required to declare this as part of their annual Self-Assessment tax return.

Taxpayers that have overpaid tax on savings interest can submit a claim to have the tax repaid. Claims can be backdated for up to four years from the end of the current tax year. This means that claims can still be made for overpaid interest dating back as far as the 2019-20 tax year. The deadline for making claims for the 2019-20 tax year is 5 April 2024.

The Construction Industry Scheme

The Construction Industry Scheme (CIS) is a set of special tax and national insurance rules for those working in the construction industry. Businesses in the construction industry are known as 'contractors' and 'subcontractors' and should be aware of the tax implications of the scheme.

Under the scheme, contractors are required to deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance liabilities.

Contractors are defined as those who pay subcontractors for construction work or who spent more than £3m on construction a year in the 12 months since they made their first payment. Subcontractors do not have to register for the CIS, but contractors must deduct 30% from their payments to unregistered subcontractors. The alternative is to register as a CIS subcontractor where a 20% deduction is taken or to apply for gross payment status.

Monthly returns must be submitted online. The monthly return relates to each tax month (i.e., running from the 6th of one month to the 5th of the next). The deadline for submission is 14 days after the end of the tax month. Contractors who have not paid subcontractors in a particular month are required to submit a 'CIS nil return' or notify HMRC that no return is due.

Additionally, new VAT rules for building contractors and sub-contractors came into effect on 1 March 2021. This means that for certain specified supplies, sub-contractors no longer add VAT to their supplies to most building customers, instead, the contractors are obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers. This is known as the Domestic Reverse Charge. The contractors can then claim back the output tax paid as input VAT, subject to the usual rules.

Beat the rush and file your tax return early

The January Self Assessment deadline seems like a long way off, but you don’t have to wait until the last minute to file your return.

Self Assessment customers can take advantage of four key benefits when filing early, HM Revenue and Customs (HMRC) has revealed.

Filing ahead of time will give customers more control over their financial affairs and beat the January rush.

The four benefits to filing early are:

  • Planning: find out what you owe for the 2022 to 2023 tax year as soon as you have filed, which allows for more accurate financial planning.
  • Budgeting: spread the cost of your tax bill with weekly or monthly payments using HMRC’s Budget Payment Plan.
  • Refund: Check if you’re due a refund in the HMRC app once you’ve filed.
  • Help: you can access a range of online guidance and information to help you file your return and get help if you are unable to pay your bill in full by the 31 January deadline. You may be able to set up a Time to Pay plan.

Myrtle Lloyd, HMRC’s Director General for Customer Services, said: “Customers who file their tax return early get to see exactly what they owe and have more time to budget, reducing the stress around Self Assessment.

“Given that January is the busiest month for HMRC’s phone lines, I urge customers to check out the tips on filing your tax return early on GOV.UK and to consider doing so themselves.”

There is lots of help and support available online:

  • customers can access the new online tool to check whether they need to do a Self Assessment tax return.
  • HMRC’s top tips for filing tax returns early can be found on GOV.UK.
  • ask HMRC’s digital assistant to find information about Self Assessment. If they cannot help, chat live with an HMRC webchat adviser.
  • access webinars and videos about Self Assessment

Customers need to be aware of the risk of falling victim to phishing scams and should never share their HMRC login details with anyone, including a tax agent, if they have one. HMRC scams advice is also available on GOV.UK.

Need support or advice Self Assessment? We can help.

Delays in Making Tax Digital

Strong doubts have been raised over the current Making Tax Digital (MTD) timetable.

HMRC launched its flagship digitisation scheme in 2015-16, intending to move tax systems and records to a modern management platform by 2020.

The aim was to maximise tax revenue, make sustainable cost savings and improve customer service by modernising systems for VAT, income tax self-assessment and corporation tax.

HMRC also planned to require business taxpayers to keep and submit quarterly digital tax records.

The flagship tax digitisation project has, however, been beset by issues and delays. A recent National Audit Office (NAO) paper reported that the scheme is now expected to cost around five times its original budget.

Delays ‘undermining credibility’ of the programme

Gareth Davies, the head of the NAO, said: “The repeated delays and rephasing of Making Tax Digital have undermined the programme’s credibility and increased its costs.

“They put at risk the support of taxpayers and delivery partners, including those who are essential to the programme succeeding.

“It has made some recent progress on VAT but it has not yet tackled the most complex elements of the programme and significant delivery risks remain.”

HMRC confident on meeting new timelines

HMRC chief executive Jim Harra has admitted the Government underestimated the scale and complexity of the project.

Since December 2022, the tax authority said it has been undertaking a series of ‘co-creation’ events involving unnamed stakeholders “with the ambition of resolving the most pressing design issues within the coming months”.

They said they were confident about the prospect of delivering MTD for income tax self-assessment to its new timelines.

Those with incomes above £50,000 will join the programme in 2026 while those in the £30,000 to £50,000 bracket will join in 2027. The Treasury is currently reviewing whether MTD quarterly reporting is appropriate for people with income between £10,000 and £30,000.

However, representatives from the business, tax and accountancy world have expressed severe doubts to MPs about HMRC’s ability to get the project online at its current schedule.

Alison Kerrey, chair of the joint Chartered Institute of Taxation and the and the Association of Taxation Technicians Digitalisation and Agent Services Committee, said: “HMRC and the Government’s execution of this major change to the tax system feels like it is out of control, with spiralling costs, unrealistic timescales, and questionable benefits.”

Need support with business tax? We can help.

Creative solutions to raise finance as interest rates remain high

The current high interest environment can pose expensive challenges for businesses using traditional financing methods.

Bank loans still make sense for some companies; however, there are plenty of alternative finance options.

Being open to innovation and thinking creatively can help businesses access funding while minimising the impact of high interest rates in their financial endeavours.

With all types of funding, however, it is vital to have a strong business pitch to secure investment, as well as a sound understanding of any potential risks and pitfalls.

Peer-to-peer lending

P2P lending websites connect small businesses with smaller scale investors without going through a bank.

Borrowers can benefit from lower interest rates, increased lending opportunities and faster loan approval times when compared to traditional financial institutions.

Angel investors and venture capital

Angel investors provide initial seed money for startup businesses, usually in exchange for ownership equity in the company. It’s sometimes called ‘seed’ funding and you can generally expect to raise anything up to £1 million.

Venture capital firms invest in early-stage companies with high growth potential.

Small business grants

You may be eligible for a government small business grant to cover certain types of expenditure such as cost of premises, plant, machinery and IT equipment.


Crowdfunding has emerged as a popular way of accessing alternative funds, especially for startups, growing businesses and creative projects.

By leveraging online platforms, entrepreneurs can reach a broad audience of potential investors who are willing to contribute smaller amounts to support their ventures.

Strategic partnerships

Forming strategic partnerships with other businesses can unlock financing opportunities. These partnerships may involve joint ventures, co-branding initiatives or revenue sharing agreements that can help share the financial burden and leverage each other’s strengths.

Need support or advice with raising finance? We can help.