Tax switch hits staff abroad

JP writes: We are a charity with three people working on a temporary project in east Europe. They are on the payroll and we have been operating an NT code. After the change in this year´s budget should we deduct tax from their wages?

Answer

As the employer, you need to comply with the Revenue tax code for your staff. Until they are changed from an NT code you may continue to operate on the same basis as before. The Finance Act provides that the 100% Foreign Earnings Deductions will no longer apply from budget day and all British residents will be fully taxable on their worldwide income in Britain. It, therefore, depends on their residence status and whether the Revenue will alter their coding. The definition of residence is that a person has to be in Britain for at least six months in any one year or more than 90 days on a regular basis. Although the changes apply only from budget day they can have a retrospective effect on earnings that were expected to be exempt and that no longer may qualify for relief. Your staff must notify the Revenue on their tax returns though they may want to tell the Revenue sooner so their tax codings can be adjusted thereby minimising the chance of a large underpayment.