If you are about to embark on an international assignment then there are a myriad of issues for you to consider. Where should you live? What’s the neighbourhood like? How good are the transport links? What about schooling for your children, shipping your belongings, cultural differences, perhaps a new language to learn as well as the new job/role that you have been assigned to undertake… Given all of these questions it is perhaps not surprising that the one aspect that you could overlook is the impact on your income tax and social security payment requirements as a result of working in a different country.

There are many myths regarding international assignments. Here are the top three:

• Provided you're in the overseas location for less than six months then there won't be any host location tax or social security obligations
• Provided all of your earnings remain paid to you in your home country then you will not be liable to income tax or social security in the host location
• Provided you continue to pay tax in your home country there cannot be an overseas tax charge

Unfortunately, specific criteria need to be satisfied to enable you to rely on the above tests. To start with you will need to establish whether or not the home and host locations that you are moving between have an appropriate income tax treaty. You will also need to consider whether an appropriate Social Security Agreement applies between the two locations to assist you in determining where you will be liable to social security during your assignment.

SO WHAT SHOULD YOU DO?

If you are coming to work in the UK then you should confirm with your employer whether or not there is a UK withholding (Pay As You Earn or PAYE) obligation on your earnings. Simply remaining employed overseas may not be enough. If your costs are recharged to the UK or you are here for more than 183 days, then you may trigger a UK income tax withholding requirement.

To the extent that you are liable to UK tax you need to ensure that your employer withholds the correct level of PAYE to avoid any unpleasant surprises when it comes to filing your UK tax return. It is also essential to register your initial intentions with the UK tax authorities such that your UK tax status is assessed correctly.

AND WHAT ABOUT YOUR UK FILING REQUIREMENTS?

From a social security perspective, you should confirm that your employer has taken the necessary steps to ensure that you do not have a liability in the home and host locations and that you have copies of all relevant certificates such that should you require medical assistance whilst on assignment you are able to do so. Download the Arrival and Social Security fact sheets below for more guidance.

If you are going to work overseas, then as well as considering the corresponding questions in the host location, from a UK perspective you should ensure that your tax status is reviewed to establish whether or not you will break residency in the UK. Download the Departure fact sheet below for more guidance.

If you do not take the correct steps, then you will continue to have UK withholding throughout your assignment, whilst potentially also triggering an overseas withholding requirement. This could lead to significant cash flow issues.

INVESTMENTS & PENSION CONTRIBUTIONS

Finally, you will also need to consider the impact on your investments and pension contributions if you do break residency. If you rent out your UK property ensure that you file a Non-resident Landlords Form NRL1 with UK HM Revenue & Customs (HMRC) to avoid your agent withholding 22% on the gross rents you receive. You will also need to consider whether the above are liable to tax in the host location.

Whatever your position, there is no substitute for timely and good advice. "A stitch in time will save nine" when it comes to managing your personal taxes.

About The Author:

Clive Fathers specialises in expatriate taxation and leads the global Grant Thornton (GT) Expatriate Taxation Solutions team. He has 18 years experience of assisting employers and employees with managing the International Tax and Human Resources issues associated with transfers across international boarders.Click here to read more about Clive Fathers »

About Grant Thornton:

Grant Thornton UK LLP is a leading financial and business adviser with 32 offices nationwide. We are the UK member of Grant Thornton International, one of the world's leading international organisations of independently owned and managed accounting and consulting firms. These firms provide a comprehensive range of business advisory services from around 520 offices in over 110 countries worldwide. Although Grant Thornton International is not a worldwide partnership, the firms share a commitment to providing the same high quality service to their clients wherever they do business.