Remote working here to stay? But be warned, working from anywhere (WFA) or home (WFH) might not be as simple as you think.

1st March 2021

In the same week that the Government’s ‘four step roadmap” to coming out of lockdown confirmed that guidance to work from home where possible will remain in place until 21 June at the earliest, a number of high profile service industry employers announced plans for allowing workers greater flexibility in where they worked in a post-Covid world. Music technology giant Spotify announced a WFA policy which would allow its workforce to work remotely permanently beyond the pandemic; Law firm Mishcon de Reya, which has grasped the concept of treating staff as ‘trusted members of the Mishcon family’, told its staff they are free to work where and when they like – provided clients’ needs are catered for.

There are obvious benefits of retaining at least a degree of flexible working arrangements: potential for increased efficiency, recruitment benefits in that location does not have to be a key criteria for hiring, more flexible working for employee retention whether for family-friendly reasons or for senior members of the team wishing to wind down towards retirement. Without doubt there is a financial incentive for employers who are able to reduce office space and choose more affordable locations.

But before an employer takes to joining this WFA or WFH bandwagon, they should consider a variety of issues, including tax, social security, immigration and employment implications. This is especially true when “anywhere” or “home” is not in the UK or indeed spread across a number of international locations.

The taxation of internationally mobile employees is a complex area and should be looked at on a case-by-case basis. The complexity covers the need to identify tax risks in the host country as the fact that that the employee is remotely connected with their UK base, and is working entirely in a virtual environment, does not mean that there no overseas tax risk.

WFH in the UK is also not that simple. HMRC has introduced measures specifically to address the current COVID-19 situation, such as the temporary exemption whereby there will be no Income Tax or National Insurance implications for an employee where an employer has reimbursed him or her for home office equipment that has been purchased during this period to enable them to work at home due to COVID-19. However, once we are in a situation whereby an employee chooses rather than is compelled to work from home, we are open to another set of scenarios. There are various, and sometimes complex rules, to consider depending upon the type of expenditure incurred that need to be considered and employees who create their own home offices, exclusively for business use, may also be liable for Capital Gains Tax. So maybe not so simple as it seems?

If you or your organisation are considering WFA or WFH policies, and wish to explore the tax implications as part of that review, please contact Rachel Skells or Michael Greene.