International tax issues: Get your affairs in order

Individuals and businesses who occasionally or frequently travel for work need to consider getting their international tax affairs in order. The 2023/24 personal tax filing deadline is 31 January 2025 which will soon be coming into view.

At Westcotts, we look after a range of matters for international clients and clients with aspects of working globally.

HM Revenue & Customs is potentially interested in seeking tax if work is physically performed in this country. This is important to remember for those leaving and entering the UK.

Since the pandemic, working from home has become common whilst working remotely in another country is increasing in frequency.

International tax issues

For those working temporarily in the UK, whilst they may remain non-UK resident for tax purposes, it does not necessarily mean they do not have to consider UK taxes. This relates to the earnings on the duties performed when physically in the UK. In some situations, there may be no UK taxes due, but every scenario will be different and should be reviewed.

On the flip side, a UK resident who has worked temporarily overseas and has suffered a tax liability in the host country, may need assistance in claiming credit for any overseas taxes paid to ensure no double taxation arises in the UK.

In many cases, the overall worldwide tax burden may not materially differ (unless the person was lucky enough to work in a no-tax or low-tax country). However, the question of which jurisdiction should receive which slice of tax is an important one.

Something to bear in mind with international tax matters is that just because one country withheld taxes at source, does not mean this is necessarily the country that should keep those taxes.

While many may think it does not matter too much if the overall taxes paid is ‘roughly right’, it can be a harsh lesson to learn when the tax authorities of one jurisdiction catches up and asks for taxes to be handed over, only to find out the other jurisdiction is less keen to hand back overpaid taxes due to the length of time elapsed.

As a reminder, UK residents are usually taxed on their worldwide income. Some UK residents with a domicile outside of the UK may be able to avoid tax on their overseas income but only up until 5 April 2025, when new rules are being introduced. These new rules have been covered in an earlier article, so review that for more information.

Taking the right advice

The UK has several rules to avoid double taxations when it comes to international tax affairs. It has lots of conventions agreed with other countries to alleviate potential double taxation.

An experienced adviser can be vital to ensuring compliance across jurisdictions. They can help liaise with an adviser in another location and make suggestions to save tax from a worldwide perspective.

As always, it is best to speak to your usual adviser at Westcotts. If you would like friendly, personalised advice you can contact Paul Webb via email paul.webb@westcotts.uk or phone 01392 288555.