UK: Executives and employees working from holiday homes abroad on post-pandemic ‘workcations’ are set to come under investigation by tax authorities in the UK ahead of a possible tightening of tax laws affecting remote workers.
It comes after The Office of Tax Simplification [OTS] launched a review into the number of people working remotely from another country amid calls for a potential revamp of the tax system that could also impact on hybrid workers in the UK who are spending less time working from an office.
The Office for National Statistics [ONS] stated last month that 37 per cent of working professionals in London now work remotely, compared to 14 per cent of Londoners prior to the pandemic.
Chris Sanger, head of tax policy at Ernst & Young, told The Telegraph: “The system is designed under the old paradigm where home-working was either occasional for the office worker or was put as a permanence. Now we’re in a new world where many people are working partially at home and partially in the office and the likely future is that that’s going to carry on.”
A host of firms around the world from the travel and hospitality sectors and beyond – including Airbnb – allowed their employees to “work from anywhere” earlier in the pandemic to provide more flexibility to its workforce and incentivise potential new hires.
However, while many governments worldwide temporarily relaxed residency rules that enabled workers to remain abroad without having an impact on their tax status during the pandemic, a number of City banks and other firms are reported to be scrambling to bring their staff back to the UK over concerns that their tax treatment is being analysed by authorities.
According to tax experts speaking to The Telegraph, businesses could be liable to pay corporation tax if company executives are making business decisions and negotiating contracts in holiday homes from popular remote working destinations such as Greece and Portugal. Employees working abroad could also have their tax dealings come into question by being made to pay income taxes and social security fees, should the investigations develop further.