Working For a Foreign Company While In UK
Discussion
Does anybody know what the situation is with me working in the UK for a Swedish company? They don't want to set up a UK company to pay me i.e. they want to pay me direct from Sweden. How do I pay my taxes, NI etc? Is there a standard "method" for doing this? I will be the only employee in the UK - rest all reside in Sweden.
That depends.
You need to know if you are an employee or under some sort of self employment arrangement.
You also need to know how they are treating the payments to you regarding Swedish tax.
If you are an employee, what they should be doing is setting up an agent in the UK so that you can be properly handled in the UK for PAYE and NI purposes. I had to do that for an American company who appointed a UK sales agent. He was their only UK employee and what they did was establish a UK subsidiary limited company and make him the one and only employee. The UK company then registered for PAYE and we, as the company's accountants, administered all the PAYE, NI and other UK tax matters for the UK company.
You need to know if you are an employee or under some sort of self employment arrangement.
You also need to know how they are treating the payments to you regarding Swedish tax.
If you are an employee, what they should be doing is setting up an agent in the UK so that you can be properly handled in the UK for PAYE and NI purposes. I had to do that for an American company who appointed a UK sales agent. He was their only UK employee and what they did was establish a UK subsidiary limited company and make him the one and only employee. The UK company then registered for PAYE and we, as the company's accountants, administered all the PAYE, NI and other UK tax matters for the UK company.
Eric Mc said:
I had to do that for an American company who appointed a UK sales agent. He was their only UK employee and what they did was establish a UK subsidiary limited company and make him the one and only employee. The UK company then registered for PAYE and we, as the company's accountants, administered all the PAYE, NI and other UK tax matters for the UK company.
Exactly the position that I may find myself in if I end up in this role. They have already mentioned they don't want to go through the hassle of setting up a company. Any other options?
They may not have a choice - if they want to remain within the law.
Sweden is within the EU now so they are bound by all the regulations that pertain to the use of employees in other EU countries.
If they think they can arrange it (and you are in agreement), they might be able to treat you as a "Self Employed" individual and pay you without any need to deduct Swedish tax or for UK tax and NI to be administered under the PAYE system. If that is the case, the legal onus will be on you to return this income as a Self Employed individual and complete a Self Assesment tax return accordingly. You will also need to notify the Revenue in the UK within three months of starting this Self Employemnt.
The Revenue take the view that being "Employed" or "Self Employed" is a matter of fact, not choice, so what you or your Swedish "employers" may wish is not necessarilly what the Revenue here might decide is correct.
Sweden is within the EU now so they are bound by all the regulations that pertain to the use of employees in other EU countries.
If they think they can arrange it (and you are in agreement), they might be able to treat you as a "Self Employed" individual and pay you without any need to deduct Swedish tax or for UK tax and NI to be administered under the PAYE system. If that is the case, the legal onus will be on you to return this income as a Self Employed individual and complete a Self Assesment tax return accordingly. You will also need to notify the Revenue in the UK within three months of starting this Self Employemnt.
The Revenue take the view that being "Employed" or "Self Employed" is a matter of fact, not choice, so what you or your Swedish "employers" may wish is not necessarilly what the Revenue here might decide is correct.
IR35 does not apply to "Self Employed" individuals or to ordinary employees. It is a matter for those who try to escape PAYE and NI by operating THEIR OWN limited companies and then pay themselves from their own companies by methods which result in the Inland Revenue not getting their full whack of PAYE and NI - dividends being the classic technique used in these companies.
This would not be an issue in your situation.
If the Swedish crowd DID set up a limited company to handle your "income" through the PAYE system, you would be a mere employee of that company and would be taxed and NI'd under PAYE on your earnings in the normal way. The Inland Revenue would be perfectly happy with this arrangement.
If you were "Self Employed", you would be responsible for returning your tax and NI liabilities under the Self Assessment system. The Revenue are not mad keen on self employed individuals as they do tend to pay less tax and certainly less NI than "employed" individuals. However, if you can "prove" that you are a bona fide Self Employed individual, this could be an option. However, in my opinion, acting as a sales agent (or whatever) for a single company would not normally constiutute a Self Employed activity.
This would not be an issue in your situation.
If the Swedish crowd DID set up a limited company to handle your "income" through the PAYE system, you would be a mere employee of that company and would be taxed and NI'd under PAYE on your earnings in the normal way. The Inland Revenue would be perfectly happy with this arrangement.
If you were "Self Employed", you would be responsible for returning your tax and NI liabilities under the Self Assessment system. The Revenue are not mad keen on self employed individuals as they do tend to pay less tax and certainly less NI than "employed" individuals. However, if you can "prove" that you are a bona fide Self Employed individual, this could be an option. However, in my opinion, acting as a sales agent (or whatever) for a single company would not normally constiutute a Self Employed activity.
Darrant - I don't understanf your comment "I guess I will leave it with them". I don't think that is an option. Whatever arrangements are eventually set up, you will have a legal obligation to pay UK tax on your earnings from this activity. Therefore, it is essential that you find out from the Swedes how they intend to handle this so that you will know exactly what you have to do to stay on the correct side of UK tax law.
If the Swedes do start deducting Swedish tax, you will STILL have to notify the UK tax authorities of these earnings. Because of the Double Taxation Agreement bewteen Sweden and the UK, you may not have any additional UK liabilities. If Swedish tax rates are higher than the UK (and I'm pretty sure they are), the UK government WILL NOT refund you the excess.
If the Swedes do start deducting Swedish tax, you will STILL have to notify the UK tax authorities of these earnings. Because of the Double Taxation Agreement bewteen Sweden and the UK, you may not have any additional UK liabilities. If Swedish tax rates are higher than the UK (and I'm pretty sure they are), the UK government WILL NOT refund you the excess.
As is NI employers contribution 34% :yike: yes 34% so if you go Self employed demand a pay rise of about 25% 
Eric Mc said:
Darrant - I don't understanf your comment "I guess I will leave it with them". I don't think that is an option. Whatever arrangements are eventually set up, you will have a legal obligation to pay UK tax on your earnings from this activity. Therefore, it is essential that you find out from the Swedes how they intend to handle this so that you will know exactly what you have to do to stay on the correct side of UK tax law.
If the Swedes do start deducting Swedish tax, you will STILL have to notify the UK tax authorities of these earnings. Because of the Double Taxation Agreement bewteen Sweden and the UK, you may not have any additional UK liabilities. If Swedish tax rates are higher than the UK (and I'm pretty sure they are), the UK government WILL NOT refund you the excess.
Sorry Eric by that I meant in respect to setting up a UK company - they can do all that!
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