The Office of Tax Simplification (OTS) is to carry out a review of the tax implications of hybrid and distance working, with a particular focus on arrangements which involve employees working across borders.
The scope of the review will cover potential tax and social security issues for employers and employees including the following:
the point at which the UK should tax employees spending time working overseas and overseas employees spending time working in the UK, including where more than two countries are involved;
the tax treatment of accommodation, travel and other expenses, including a review of whether the permanent workplace rules are clear for hybrid/remote working practices;
the impact of short-term business visitor rules, overseas workday relief and PAYE withholding considerations;
implications for pension contributions and employer share schemes;
the creation of permanent establishments for corporate tax;
the allocation of taxing rights to each country and need for double tax relief; and
implications for remote working within the UK.
The review will assess whether developments in remote working are likely to make complying with the tax system more complicated and will aim to identify opportunities to simplify existing features of the tax system.
Together with the potential tax implications, the scoping document suggests that the OTS will review emerging trends around hybrid and distance working, including how employers are changing their policies and procedures.
Rhiannon Kinghall Were and Philip Swinburn (Macfarlanes) welcomed the review but noted that as cross-border issues are involved, coordinated international action would ultimately be required. ‘It will be vital for the OTS’s review to flow into the OECD’s work in this space scheduled for next year’, they said.
The Office of Tax Simplification (OTS) is to carry out a review of the tax implications of hybrid and distance working, with a particular focus on arrangements which involve employees working across borders.
The scope of the review will cover potential tax and social security issues for employers and employees including the following:
the point at which the UK should tax employees spending time working overseas and overseas employees spending time working in the UK, including where more than two countries are involved;
the tax treatment of accommodation, travel and other expenses, including a review of whether the permanent workplace rules are clear for hybrid/remote working practices;
the impact of short-term business visitor rules, overseas workday relief and PAYE withholding considerations;
implications for pension contributions and employer share schemes;
the creation of permanent establishments for corporate tax;
the allocation of taxing rights to each country and need for double tax relief; and
implications for remote working within the UK.
The review will assess whether developments in remote working are likely to make complying with the tax system more complicated and will aim to identify opportunities to simplify existing features of the tax system.
Together with the potential tax implications, the scoping document suggests that the OTS will review emerging trends around hybrid and distance working, including how employers are changing their policies and procedures.
Rhiannon Kinghall Were and Philip Swinburn (Macfarlanes) welcomed the review but noted that as cross-border issues are involved, coordinated international action would ultimately be required. ‘It will be vital for the OTS’s review to flow into the OECD’s work in this space scheduled for next year’, they said.
