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UK Businesses Must Plan To Remit Now Or Pay Later, According To PwC

by Robin Pilgrim, LawAndTax-News.com, London

08 October 2008

Planning now for changes to payroll, communications and employees’ offshore and onshore bank account structures will help mitigate the risk of tax increases resulting from new remittance rules, PricewaterhouseCoopers LLP announced on Wednesday morning.

According to the professional services firm, the government’s changes to the taxation of non-domiciled employees (which received Royal Assent on July 21, 2008, under the Finance Act 2008), have brought many changes to the remittance basis.

Theses changes make it more complex to predict how much overseas income can be kept outside the UK. For example, it is now not possible to consider the tax year as a whole when assessing what income has been remitted to the UK. This means where employment income payments relating to UK and overseas workdays are made into an overseas bank account every transaction must be assessed separately.

Commenting on the practical implications of the changes, Sean Drury, partner, PricewaterhouseCoopers LLP, remarked:

“The payroll, communication and bank account structure implications of the new rules are a triple pressure for companies and their employees to get to grips with but the window of opportunity to preserve significant tax savings is closing - we’re advising companies to plan to remit now or pay later.”

Grandfathering relief is not available under the new regime, so action is required for both the 65,000 expatriate employees currently seconded to the UK by their employer and future arrivals.

Mr Drury went on to explain:

“While unravelling the complexities of the legislation is undeniably causing companies with a global workforce a headache, facing the challenge head on with careful planning will prevent this challenge becoming a migraine.

“This is particularly critical now as the downturn is forcing businesses to recognise the benefits of thinking more creatively about how they deploy their workforce."

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