Evening folks
Hoping for some advice or a steer please!
One of our employees has been granted a 2 year visa for Canada - which allows her to work and then pay a lump sum in tax when she returns to the UK (this is the advice she has received)
We have offered her the opportunity to take a sabbatical (travel etc) then start working again from Canada whilst she’s still got the visa.
If I’m honest I’ve no idea where to start as I don’t think it’s as simple as just keeping her contact as is (apart from the sabbatical agreement?
Any advice would be most welcome! Thanks
Apologies Faye, I'm not totally clear on the working angle - are you offering her the opportunity to continue to work for your organisation whilst still in Canada?
Hi Clare , thanks for the reply. Yes, we’re offering a 3 month sabbatical then she’ll continue to work for us in her existing role but she’ll be based in Canada.
Thanks Faye, in which case I think some really good taxation and/or financial advice is needed here as her (presumably) temporary status in Canada will influence her payroll arrangements. Can your current payroll provider or organisation accountants offer some signposting?
I work abroad and have completed a HMRC P85 which means I don't pay any UK tax on money I have earned outside the UK but I still have to pay tax on any money which I earn in the UK and, importantly, I don't have to be in the UK for this to apply, it's more to do with where the money is earned so she will most likely have to pay tax as normal as an employee or submit a self-assessment if she is self-employed.
That being said, as other have pointed out, it is fraught with complications (for split tax years, dual tax avoidance etc.) There is some advice available on the HMRC website and I have always found the HMRC to be quite helpful if you contact them
You also need to check the organisational legal/tax implications of having an employee working from Canada. There is the possibility that Canadian law may consider that you have a legal entity there, and need to pay employer/corporation taxes. She may also be covered by Canadian employment law, so you may need to ensure that you are complying with that.
Ultimately you are going to need some specialist legal advice - i did work for an organisation that allowed an employee to work from the USA and ended up with a not inconsiderable bill from the IRS because it just hadn't thought about the legal and tax implications for the employer when they made the agreement with the employee
As well as the many good points raised in the thread you will also need to consider employee benefits - I would expect quite a few UK benefits would lapse for someone working overseas for that period of time - what will she do for healthcare in Canada? Will your life assurance/GIP still be valid? I'd check with your brokers in addition to tax/legal advice
