Rob Williams

Written by: Rob Williams

Rob Williams

Associate Director

Does a change in location change how income is taxed?

Since March 2020 the coronavirus pandemic has changed the way each of us go about our work on a huge scale. Whether it be adapting to working from home, experiencing issues with our technology or having to juggle home schooling alongside a fulltime job, the coronavirus has presented problems and complexities that were simply not on the radar for many of us before. 

In response to the pandemic, many individuals made the switch to a remote or hybrid working model, or have simply re-evaluated where they want to be based, which has resulted in a change in their ordinary travel or working patterns. But there is a very real risk that the tax consequences, both in the UK and overseas, may have been overlooked in the decision-making process.

The scope of the implications of such a change expands rapidly from an income tax perspective when an international element is thrown into the mix. This is especially true where border closures and travel restrictions result in an individual spending more time in one location than they would have previously. 

In most cases, the place where a person’s income is taxed depends on where they are tax resident, with a key factor in determining tax residence being the amount of time they spend in any one or more places. 

With that in mind, if an individual increases the amount of time they spend in a particular location they could actually change the country that has the rights to tax their income. Similarly, their change in location could change the country in which tax credits are claimed, and they could potentially even end up with a whole raft of reporting obligations that may not have been required previously. 

The CIOT has recently called for a review of the tax rules on working from home, as it is expected that many more individuals will choose to do so in a post-pandemic world. A fallout from a simplification of these rules could result in an increased number of people with an international aspect to their job choosing to change their location to work from home. 

In such cases, it will be extremely important to make sure their global position is considered holistically to ensure that they do not trigger any adverse tax consequences, either in the UK or overseas.  

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