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Overseas employee

My client has started a new venture.

One of the shareholder/directors is USA resident and domiciled

He is to be paid a significant (6 figure) salary on the payroll  .

His duties are to be performed outside the UK in developing overseas markets to exploit and networking with suppliers to establish facilities abroad, primarily USA and Canada.

There will be periodic visits to the UK for reporting purposes.

What is the payroll situation, i.e. is he exempt from NI and tax deductions, and if so does he need to apply anywhere for this?

Any help gratefully received


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11th Jan 2012 13:44

Not subject to UK tax & NIC

As a non-UK resident working outside the UK, he is not subject to UK income tax.  There are no PAYE procedures to observe apart from submitting the Employer Supplementary Return form P38A at the end of the tax year.

As he is not resident or present in the UK, he is not subject to UK NIC.

The only problem would be if his visits to the UK are more than incidental to his duties abroad.  If all he is doing is reporting (although I wonder why he needs to do it in person), that would be merely incidental, but if he actually starts doing some work in the UK, his salary would need to be apportioned and the UK element taxed.

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By lizzit
11th Jan 2012 13:58

Lots of things...


It depends on his country of residence, which depends on the number of days he spends in the US, the UK, and, if he meets the definition of residence in both countries, then it falls to Article 4 of the US/UK DTA. You should get his US/UK tax advisor (it might be me!) to tell you what his country of residence is. Once you know that, then you need to determine what kind of director he is. Is he a director listed on companies house? Or just a fancy title to make him look good?  If he’s a proper real director, UK tax is due on all UK directorship duties performed within the UK.  If he’s just an employee, then per the US/UK treaty article on employment, there may be zero tax due.  You need to let us know more details to answer in full. 

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By Old Greying Accountant
11th Jan 2012 15:33

Don't worry ...

... the more I look at this the wider the chasm yawns and I think expert advice is needed!

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