Call for evidence – review of hybrid and distance working

31 August 2022

The Office of Tax Simplification (OTS) is seeking views on hybrid and distance working trends and the effects on the existing tax rules and guidance. The call for evidence is open until 25 November 2022.

A huge shift in the way we work has been seen across the UK following the pandemic. Whether this is for business resilience or offering more flexibility to employees to retain talent varies by company. Current tax rules are at risk of being stretched with these new, non-traditional ways of working.

The key areas the OTS is looking to explore are:

  • working across international borders, and what that means for things like tax, social security, tax residence, and permanent establishment
  • how accommodation, travel, and other expenses work in a hybrid world, including who will pay and whether permanent workplace rules make sense
  • application of short-term business visitor rules, overseas workday relief, and modified payroll
  • the treatment and impact on pension contributions and share schemes
  • the risks or otherwise of creating permanent establishments or even changing corporate residence.

With many other tax jurisdictions offering ‘digital nomad’ visas, giving tax-free stays to mobile workers, it may be time the UK catches up to evolving working conditions.

The OTS will need to understand and consider the impacts on the exchequer and tax system, as well as conduct a thorough analysis of the implications on the UK economy. They have committed to publishing the report of findings in early 2023.

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