Any income earned by an employee or office holder (e.g. a director) in the UK will be subject to income tax and national insurance contributions ("NICs"). It is very important to understand what the UK HM Revenue and Customs ("HMRC") expect of employers in the UK, and to know whether a particular payment gives rise to a tax liability or not. Failure to do so can lead to HMRC imposing fines and penalties and, in certain circumstances, even a criminal liability.
This section will give an overview of the tax issues which are likely to arise when employing an individual in the UK and covers whether an individual is employed or self-employed for tax purposes, PAYE, expenses, benefits, NICs, residence and domicile and termination of employment. Each section of this guidance requires careful consideration to ensure that an employer is aware of all their responsibilities. However, this guidance aims to give no more than an awareness of the basic principles and there are detailed rules behind the points covered.
Specialist advice should be obtained before taking, or refraining from taking, action based on the contents of this site which is only intended as a brief note. If you require specific advice on any aspect of this section or on any other UK employment related matters, please contact David Bickford or another member of the Penningtons Employment Team.