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United Kingdom - Special considerations for short-term assignments

United Kingdom - Special considerations for short...

Taxation of international executives


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Residency rules
Payroll considerations
Taxable income
Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency rules

Are there special residency considerations for short-term assignments?

If an individual spends 183 days or more in the United Kingdom in a tax year, they will be regarded as resident in the United Kingdom for the whole of that year. The tax year runs from 6 April to the following 5 April. For determining UK residence, usually a day is counted if the individual is present at midnight.

Short-term assignees spending less than 183 days in the UK may be considered non- resident, however there could be circumstances under which a short term assignee, who is in the UK for more than 16 days in a tax year, could be classed as UK resident for that year.

Such short-term assignees would need to consider the rules in the Statutory Residence Test, which applies for tax years from 6 April 2013. It is therefore important that each assignee takes advice on their particular circumstances. Further detail regarding the UK’s Statutory Residency Test (SRT) are included in the main body of this note.

If a short-term assignee is deemed to be UK resident for a year, there may be some reliefs and exemptions available to restrict their exposure to UK tax to income attributable to UK sources/duties only. Again, due to the complex nature of the rules, the assignee will need to take specific advice regarding their circumstances.

Payroll considerations

Are there special payroll considerations for short-term assignments?

If a short-term assignee is in the United Kingdom working for an entity in the United Kingdom, it is likely that that entity will have a responsibility to operate Pay-As-You-Earn (PAYE).

However, if it is anticipated that the employee will be able to claim tax treaty relief and not have a tax liability, the UK entity might well be able to enter into arrangements with HMRC under which it does not have to operate PAYE, provided it agrees to certain undertakings. Such an arrangement is called a Short Term Business Visitor (STBV) agreement.

Taxable income

What income will be taxed during short-term assignments?

Subject to tax treaty relief, all of the income relating to UK duties will be taxable.
If the assignee is not resident in the United Kingdom, income relating to non-UK duties will not be taxable.

If the assignee is UK resident for the tax year, but is non-UK domiciled and claims the remittance basis of taxation and meets the prescribed statutory conditions are met, Overseas Workday Relief (OWR) may be claimed. The effect of OWR is that the assignee’s earnings related to non-UK duties will not be taxable in the UK if not brought into (i.e. remitted to) the United Kingdom. Otherwise, income relating to non-UK duties will be taxable.

Again, the rules relating to remittance of funds to the UK are complex. It is, therefore, important that the assignee seeks advice on their particular circumstances to ensure they do not accidentally create an additional UK tax liability.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in the United Kingdom?

It is very likely that the tax treaty between the assignee’s country/jurisdiction of residence (home jurisdiction) and the UK (host jurisdiction) will be relevant; the UK adopts the economic employer approach when interpreting the employment income article.

Detailed records should be maintained of the time which the assignee spends in the UK and of their work activities, both in the U.K and elsewhere, during the assignment.

The appropriate structuring of bank accounts should be considered before the employee commences work in the UK if there is any chance that they will become resident there.


All information contained in this publication is summarized by KPMG LLP, a UK limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on Income and Corporation Taxes Act 1988; Income Tax (Earnings and Pensions) Act 2003; Income Tax (Trading and Other Income) Act 2005; Income Tax Act 2007; Finance Act 2013; Taxation of Chargeable Gains Act 1992; Taxes Management Act 1970; Social Security Contributions and Benefits Act 1992; Social Security (Contributions) Regulations 2001; and Inheritance Tax Act 1984 (all as amended by subsequent legislation); Her Majesty’s Revenue & Customs (“HMRC”) booklets as follows: “Guidance Note: Statutory Residence Test (SRT), RDR3” published December 2013; “Guidance Note: Overseas Workday Relief (OWR), RDR4” published May 2013; immigration rules on the UKVI website at and

© 2021 KPMG LLP, a United Kingdom legal liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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