As the Chancellor gives foreign workers fighting coronavirus tax breaks, a legal expert answers your questions: How does it work, how long will it last, and is it right?
On Thursday 9 March, Chancellor Rishi Sunak wrote to the Treasury Committee announcing that people who are non-resident in the UK and working in healthcare, engineering or R&D will be able to come to the UK to work on the Covid-19 effort without seeing a change in their tax status.
Helen Jones, partner in private client services at BDO answers a selection of the key questions currently being asked.
Non-residents in the UK and working in healthcare, engineering or R&D will be able to come to the UK to work on the Covid-19 effort without seeing a change in their tax status
Is it right to tweak the law like this when practitioners are always calling for simplicity and certainty?
In ordinary circumstances, we do call for tax simplification to help individuals and businesses navigate their financial affairs more easily, but currently we are living in extraordinary times and so anything that can help people get through Covid-19 is welcome.
Would you expect the time limit to be extended, if required?
The duration of this measure is being kept under review. With all Covid-19 matters, the expectation is that HMRC will be regularly reviewing matters and making amendments as required, a move which we welcome.
Is it the first time that the government had done something like this with non-res rules for a specific sector/purpose?
The government does consider exceptional circumstances on an ongoing basis. For example, certain rules have been relaxed for those who have been unable to leave the UK or those who have had to return through Covid-19.
Previously, when the UK hosts major sporting events, the rules have been relaxed in order to allow sportspeople to compete in the UK without encountering tax issues.
Would those impacted usually pay UK income tax on their UK earnings?
Helen Jones is a partner at accountancy and business advisory firm BDO
The key is to ensure that people’s worldwide income is not taxed as a consequence of specific work completed in the UK towards the Covid-19 effort.
The exact impact on individuals differs depending on specific details such as their employment status and domicile, but in the short, if this measure was not in place, some could be unexpectedly taxed on their worldwide income for the whole of the tax year, not just UK earnings.
Doctors are a key consideration, but this also impacts other sectors, for example, Formula One engineers who have been working on ventilators. This change appears to be looking to ensure fairness for those impacted.
After how many days work in the UK, would such non-UK income normally become taxable?
The number of days before non-UK income would normally become taxable depends on the individuals circumstances, however it could be as few as 46 days. The OECD has made recommendations regarding where people should be taxed when displaced by reason of Covid-19, but at this stage this has not been legislated.
Could people be taxed in the UK some of the year, and not for the rest, or is it all or nothing?
There are many factors to consider in respect of an individual’s circumstances, but often the self-employed will either be taxed in full in the UK, or not at all.
The result often depends on how the tax rules are applied in an individual’s home country and the application of any double tax treaty between the two countries.
If you are concerned about your affairs, you should consider seeking independent professional advice. You can also contact HMRC on: 0300 200 3300.
Helen Jones is a partner at accountancy and business advisory firm BDO
