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Expatriate tax planning

An investment company based in the US wanted to set up a UK operation. To do so they wished to send their managing director to the UK to oversee the set-up of the subsidiary.

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We assisted the company with expatriate tax advice and were able to save both the individual and the company significant tax costs.

On arrival to the UK, we advised our client that the US company should issue an assignment letter saying that he would be seconded to the UK initially for a period of “up to two years” and that he remain under his US employment contract. This ensured that for the first 24 months London was his temporary workplace, and therefore he was entitled to claim detached duty relief which enabled us to claim accommodation and subsistence costs of over £74,000 under this relief.

As our client was considered ‘resident’ but ‘not ordinarily resident’, he was eligible to claim a deduction for his non UK workdays which amounted to around £42,000. We advised on social security issues, recommending that our client remained under the US social security system, resulting in substantial tax savings for both our client and his employer. We were also able to claim deductions on contributions that our client made to his US pension plan. Our client contributed £7,860 and we were able to claim back £3,150 from his UK tax bill.

In total, our client was refunded around £47,000 by HM Revenue & Customs in his first year of working in the UK. Since then, two more employees of the US investment company have been seconded to the UK, and we are advising them on a similar basis. One individual is particularly high net worth, and we have provided tailored advice which makes the best use of his residence and domicile position.