Autumn Statement 2022: impact on global mobility
The Chancellor announced in the Autumn Statement a general increase in employment tax costs. Organisations with internationally mobile workforces should consider how they are impacted.
Below we explore some of the consequences of the Autumn Statement on globally mobile employees:
Income tax and national insurance (NIC)
The biggest announcement was the decrease in the level where an employee pays the additional rate of tax (45%) from £150,000 to £125,140 from 6 April 2023.
In addition to this, the income tax personal allowance, tax bands and NIC thresholds for employers and employees will remain frozen until 5 April 2028.
Impact on global mobility:
The decrease in threshold for the additional rate of tax and freezing of allowances and thresholds will likely result in an increase in tax costs for UK inbound employees and their employers. This is particularly the case for tax-equalised UK-inbound employees, making the grossed-up tax rate even higher in some circumstances.
A potential net pay decrease will arise for outbound tax-equalised employees, although the employer will likely find the host country tax cost decrease accordingly.
As a result of the above tax costs, projections and budgeting should be considered.
Other tax considerations
Off-payroll workers
No further detail or reviews of the current off-payroll working rules (a regime that requires an organisation to assess the employment status position of limited company contractors used) were announced at the Autumn Statement following last month’s cancellation of the repeal of the off-payroll working rules.
Impact on global mobility:
Many UK organisations subject to the rules turned to offshore contractors to mitigate their obligations under the off-payroll working rules. However, should an overseas contractor visit the UK to perform work, the off-payroll working rules must be applied. The current regime is onerous and complex and in need of a review to make it more user-friendly. However, for now, organisations must seek advice to ensure full compliance.
Remote working
With the Autumn Statement adding more tax cost to hiring employees to work in the UK, combined with the skill shortage experienced in most industries, organisations may look to hiring employees to work remotely from a lower-cost overseas location.
Impact on global mobility:
Organisations should ensure they understand the UK and local tax, social security, immigration, HR and technology implications of remote working. Ensuring a remote working policy is in place is key to this process.
If you would like to find out more about our global mobility strategic advisory and tax services, please contact our team below.