It has been three years since Boris Johnson ordered Britain to work from home, but while lockdown may thankfully be a distant bad memory, remote working is still alive and well.
Figures published today by RSM UK, an accountancy firm, show a third of companies have taken the concept one step further – and allow employees to work not just from home, but anywhere else in the world.
It added that of the 170 companies it spoke to which are embracing so-called “work from anywhere” policies, 30pc had no restrictions on the amount of time workers spent abroad.
Some major British companies have adopted these ultra-flexible working policies with bosses seeing a spike in jobseekers turning their backs on offices in favour of beaches.
Despite fears of an impending recession and other economic woes, unemployment remains incredibly low, handing employees greater bargaining power when negotiating with employers. Searches for “fully remote” roles soared by 21pc in the first three months of the year, according to Flexa Careers, a site for flexible jobs.
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Data from jobsite Adzuna showed the majority were in IT, public relations, and sales.
Adzuna’s Paul Lewis said: “The rise of ‘work from anywhere’ is a response to shifting priorities and the demand for more. Since January 2021, we’ve seen steady increases in employers offering the perk, with big brands like Spotify pioneering the way.”
Indeed, remote jobs at the streaming giant have an average salary of £43,861, according to job vacancy listings on Adzuna.
Other big businesses with fully remote policies include vintage clothes marketplace Depop, charity Blood Cancer UK, apprenticeship platform Multiverse, founded by Sir Tony Blair’s son Euan, and nutritional shake maker Huel. Data published by Flexa Careers showed 6pc of advertised jobs in March were “fully remote”, while 19pc were billed as “remote first”.
Among these was digital bank Zopa, which already allows employees to work 120 days a year from abroad, although it is considering increasing this to 130 days. Wise, formerly Transfer Wise, a foreign exchange firm, lets staff work from anywhere for 90 days a year once they have worked for six months.
“Buy now pay later” credit provider Klarna (average salaries of £53,000 according to Adzuna) and digital bank Revolut (£41,000) also offer employees the opportunity to work abroad.
Employees spend, on average, 49 minutes a day working from home – down from its previous peak of one hour and nine minutes, according to the Office for National Statistics.
Despite calls from leading Conservatives – including Chancellor Jeremy Hunt – a heated labour market has left companies no choice but to offer flexible working, lest they lose out in the so-called talent war.
Some companies have been known to offer “house-swapping” policies that allow employees based in different countries to trade homes to work remotely from abroad.
Adzuna data shows average salaries for jobs billed as “remote” are £41,779 – and 132,807 vacancies are currently listed in the UK. However, working abroad can be a “tax minefield”, warned Joanne Webber, of RSM UK.
She said: “There will be different tax rules depending on the country an individual chooses to work from, so employees venturing into work-from-anywhere arrangements need to set parameters for staff and have a clear company policy in place, so everyone understands the risks.”
Accountancy firm PwC said employees working remotely abroad may need to acquire tax residency but usually only if they work outside of Britain for more than 183 days in a 12-month period.
It also warned employees against accidentally triggering residency elsewhere and said employers could have “significant corporate tax implications” if an employee working abroad has created a “permanent establishment”. The risk is higher if the employee is senior and is client facing or works in business development, PwC said.
There are often financial consequences when an employee works remotely abroad. For example, an employee may acquire tax residency in another country or jurisdiction. This usually won’t be the case if an employee works remotely outside the UK for less than 183 days in a 12-month period.
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However, care should be taken to monitor any other factors that might trigger residency in addition to days spent in the jurisdiction. If an employee does work for more than 183 days in another country, specialist advice should be sought immediately.
If your income has been taxed twice, by HMRC and the country you work in, you can usually claim some of it back via Foreign Tax Credit Relief (FTCR), as part of a self-assessment tax return.
How much you can claim will depend on whether a double taxation agreement is in place between Britain and the country you’re working from. Even if there is one, limits will vary.
Employers should understand their obligations in relation to reporting and collecting tax in other jurisdictions and should bear in mind that they will be held responsible for ensuring their employees’ tax payments are calculated correctly and that they comply with any local social security reporting requirements.
There are also potentially significant corporate tax implications if it is found that an employee working remotely abroad has created a “permanent establishment” for their employer in the relevant jurisdiction.
The risk of this happening could arise if the employee’s role involves concluding contracts on behalf of their employer, if the employee is senior and conducts significant client-facing or if they perform business development work.
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This article was first published on July 5 2023, and has since been updated.