We have client who has limited company (A Ltd) in UK with 99% subsidiary in India (A India Ltd). One of the employee working in Indian subsidiary was once UK employed (X Ltd)(not by company in question) hence was paying UK tax and NI. He left UK 6 years back and never returned. He has NI number. He now only works for A India Ltd and wants some payment through UK company (A Ltd) by setting him up as an overseas employee with NT tax code.
Questions
1. What are the tax implications for PAYE/NI?
2. Are there any specific rules regarding inter connected company for employing worker from subsidiary?
3. Any with holding tax implications if paid gross salary?
Thanks for your help
DD
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Replies (3)
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I will have a go!
If the employee does no work in the UK and has not been in the UK for the last 6 years, he is not liable to pay UK income tax nor to pay UK NI contributions on any salary paid by a UK company. As such, he is not subject to PAYE. There would be no requirement to put him on the payroll of the UK company or to include the salary paid to him in RTI reports. He could therefore be paid the gross salary through the cash book, except that there may well be an Indian requirement for the UK company to deduct Indian tax and perhaps, social security contributions, from any salary paid by a foreign company to a worker in India.If the UK company pays a salary for work which benefits another company in India, it would be an expense not incurred for the purpose of the UK company's trade and would therefore not be deductible from the profits of the UK company, unless the cost of the salary is recharged to the Indian company.As far as I know, there is no UK withholding tax.
Agree, but
Agree with Euan, only caveat I would add is "assuming there are no duties performed in the UK" in which case UK work days may be taxable here.
