Indo-UK Patrika - Issue 1

In this first issue of Kingston Smith’s Indo-UK Patrika quarterly newsletter, we look at the effect of the recent changes to the National Minimum Wage (NMW) levels on Indian businesses in the UK, the recently announced changes to the UK immigration rules, and the implications of the newly announced Indian Direct Tax Code for companies with exposure in India.

The implications of the National Minimum Wage and shorter secondments

In our lead story, Tim Stovold, a tax partner at Kingston Smith LLP, considers the implications of the recent change to National Minimum Wage of levels in the UK and the likelihood of shorter secondments as a result. On application, Indian companies seconding employees to the UK can benefit from a dispensation which allows them to pay the living expenses of secondees, free of income tax and National Insurance. Changes to the NMW rules from 1 January 2011 mean that the amounts paid towards the dispensation for employees on secondment can no longer be counted towards the NMW calculation. As a result, employers will have to increase salary levels or the dispensation claimed through the payroll may need to be reduced.

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Immigration alert

On 5 April 2011, there will be some major changes to the UK immigration system. Since early 2008 the government has been carrying out an overhaul of the system, which now sees the introduction of a Points-Based System resulting in around 73 routes to work replaced with a 5-tier system. David Crawford, a partner at immigration law firm Fragomen LLP, discusses the new government. The current plans look to close Tier 1, the self-sponsor route, cap Tier 2, for highly skilled workers with a job or job offer, to 20,700 entrants per year and restrict Tier 4, the student route. Although intra-company transferees will be exempt from the Tier 2 cap, new rules mean that secondees will now need to be paid a minimum of £24,000 per annum if entering the UK for less than one year and £40,000 per annum for those seeking to enter for over 12 months.

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Decoding the Indian Tax Code

Our final story explains the newly announced Indian Direct Tax Code (DTC) for companies with exposure in India. Geetika Mehra, partner at Mehra Goel & Co in New Delhi, part of KS International, discusses the changes proposed in the 2010 DTC and its implications for UK companies with India-based directors where the management and commercial decisions in relation to these companies are made in India.

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Kingston Smith news

Sir Michael Snyder, Senior Partner at Kingston Smith LLP, will be travelling to India in early February for his annual visit to meet clients, prospects and business associates in the market. Covering Delhi, Mumbai and Bangalore, Sir Michael’s visits are representative of the firm’s commitment to the Indo-UK business corridor.

We hope you find the first edition of Indo-UK Patrika an interesting and informative read, and we welcome your feedback. Please email our India Desk with your thoughts, ideas and suggestions.

Chandru Iyer
International Business Development Director

Email: ciyer@kingstonsmith.co.uk
Tel: +44 20 7566 3682
Mobile: +44 7979 645 331