Partner Article

Foreigners don’t pay tax? Really?

Questions have been asked publicly about whether the expected new economic migrants from the EU will be paying UK tax.

It’s generally rather simple, and the answer is ‘yes’ - just like the average British worker with the same level of earnings in fact.

Anyone who arrives from Bucharest or Sofia and takes a job with a UK employer, to work in the UK, is taxable in the UK. And will pay National Insurance in the UK.

The normal rules apply, so low earners (of any nationality) don’t pay much of either. You have to earn £149 or more per week before you pay NI, and £182 per week before PAYE tax is deducted, but once your earnings are above these limits then your employer deducts tax through the payroll. It doesn’t matter whether you’re British or not.

EU citizens are entitled to exactly the same personal tax allowance as any ordinary UK worker, so in the first year new arrivals from any EU country should get a full year’s allowance to off set against their taxable income, just like a Brit who has returned from living abroad, or who doesn’t start work, until the middle of the year.

There is a way they might not be liable to UK NI, but it’s unlikely that they won’t be taxable here.

If they work for an employer in their home state who sends them on temporary assignment to a project in the UK, EU regulations provide that they may continue paying home country NI while they are in the UK, but the same applies to a British worker who works temporarily in Germany – UK NI can be due instead of German NI, because NI is about paying for future benefits, which will be claimed in the UK.

Temporary workers should generally, though, still pay UK tax on their earnings from work in the UK – the UK business to which they are assigned is supposed to tax them as if they were its own employees if it is being charged by the foreign business for their services. The rules on offshore employment agencies have just been tightened, so tax will be due there, too.

Romanians and Bulgarians taking a job in the UK will be very disappointed if they think they won’t pay tax here. If they are paid cash, no questions asked, by unscrupulous employers, that’s criminal tax evasion, but sadly there’s enough of that about already. It’s about ethical behaviour, and nothing to do with nationality.

This was posted in Bdaily's Members' News section by Baker Tilly .