We have been fielding a growing number of enquiries from overseas businesses wanting to set up shop in the UK.
We love nothing more than to help businesses get going, or to grow, so it’s a welcome trend.
Some of the more common questions we are asked are:
- Do we need a UK entity to employ someone in the UK?
- What do we do about PAYE if we don’t have a UK presence?
- What about pension auto-enrolment?
And the answers …
- No, you do not need a UK entity to employ someone in the UK. There may be other practical reasons why this is a good idea (like being able to set up a local bank account more easily) but there is no prohibition on using a non-UK entity to employ someone here.
- The short answer is that if an employer has no tax presence in the UK, then there is no PAYE withholdings (or national insurance) liability either. The relevant UK employee(s) will need to deal with their own taxes (and their own employee NICs contributions) at the end of the tax year. However, great care needs to be taken in determining whether there is or is not a tax presence in the country, as the concept of a tax presence is broader than what many people would assume it to be.
- In contrast to the tax position, the UK’s pension auto-enrolment law does not differentiate between UK and non-UK employers. Also, the Pensions Regulator takes the view that all employers, including those who do not have a taxable presence in the UK but still have at least one UK employee, are caught by the auto-enrolment obligations. So the short answer is that whether it has 1 or 100 employees in the UK, the employer will be expected to auto-enrol eligible employees into a qualifying pension scheme (unless an employee decides to opt-out, of course).