Brexit is here

Brexit is here

With Brexit around the corner our special edition of Tax Matters Digest reviews what this means for tax.

Tim Sarson

Partner, UK Head of Tax Policy

KPMG in the UK


In this special edition of Tax Matters Digest we remind readers of how things will change for businesses from a tax perspective from January. At the time of writing and with less than two weeks to go until the end of the Brexit transition period on 31 December 2020, negotiations between the UK and the EU on their future trading relationship continue. It is possible that a deal may not be reached. Even if a deal is able to be salvaged at this late stage, from a tax perspective this will be technically little different from no-deal. This edition includes separate articles on indirect and corporate tax, whereas the still very uncertain position for globally mobile employees is covered briefly in this article.

Indirect tax

Indirect tax is where we can expect to see the bulk of the immediate tax changes. Our separate article gives a flavour of how life will change for UK businesses in January 2021 in relation to VAT, customs and excise duties.

Corporate tax

Our separate article gives a recap of changes we can expect to see in January 2021 and our thoughts for how corporate tax may change in the longer term.

Globally mobile employees

Brexit will bring an end to freedom of movement between the UK and the European Economic Area (EEA) and therefore there will be tax and immigration changes for globally mobile employees. KPMG Law’s recent alert explains the new immigration rules. At the time of writing, the social security position of internationally mobile employees from 1 January 2021 remains uncertain.

For secondments that began prior to 1 January 2021 and continue ‘without interruption’, we understand HMRC’s view is that the Withdrawal Agreement means individuals who hold valid A1 certificates should continue to be covered by their home country’s social security systems. We also understand HMRC intend to construe ‘without interruption’ broadly – for example potentially allowing A1 coverage to continue for ‘back to back’ secondments. However, it is not clear whether all EU member states’ social security authorities share HMRC’s views so this should not be relied upon.

For secondments that begin on or after 1 January 2021, the UK Government has indicated its intention to negotiate a new bilateral social security agreement. If concluded, this would in effect replicate the existing EU regulations. However, if agreement is not reached by the end of the transition period, the social security treatment of secondments between the UK and EU member states, Iceland, Liechtenstein, Norway, and Switzerland will, unless covered by an existing reciprocal agreement (where it has been agreed with the other state that these are still valid), be based on the UK’s ‘rest of the world’ rules, which provide for 52 weeks’ exemption or continuing liability in the relevant circumstances. At the time of writing there is a new agreement in place with Ireland and it has been confirmed that the old agreement with Switzerland will remain valid.

HMRC are expected to provide additional guidance on social security in due course. We will publish further commentary on the position as it becomes clearer.

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