Universities, Colleges and International Employment Tax Issues

Universities and Colleges in the UK rank, in many respects, amongst the most international of British institutions. Not only do they typically recruit students globally, but in many cases, their staff (particularly academic) are also international.

Not only are the professors, lecturers and research fellows often coming to the UK from abroad, but more importantly (at least from a tax and social security or National Insurance perspective) they are often continuing to undertake significant amounts of work internationally. This can range from long-term research projects overseas, to attending foreign seminars and congresses, to living and working between the UK and another location as a ‘commuter’.

Many Universities and Colleges have a ‘laid back’ approach to such working patterns and they have typically assumed that this doesn’t create any implications for the Institute, either corporately or as an employer. However, this assumption is dangerous and could leave the Institute exposed to significant liabilities (together with HR problems and negative PR, for example).

Specifically, the international nature of academic life and the fact that a number of academics, for example, have cross-border commuting patterns, lecturing and tutoring for UK-based Institutions but also having families and personal lives abroad, can easily mean that the University or College should be accounting for Social Security Contributions in the employees’ home locations rather than the UK.

How and why is this the case?

This is linked to the EU Regulations on Social Security Coordination (which the UK has signed up to via the EU/UK Trade & Cooperation Agreement). These regulations state that:

1. Social Security should only be payable in one jurisdiction (at least when dealing with UK/EU scenarios).
2. Where you have a ‘multi-state worker’ i.e., someone who commutes and works in two or more member states, the social charges should be payable in their home jurisdiction, where they spend at least 25% of their working time in that state.
3. Working time for academics could include not just lectures and tutorials (which would typically be undertaken physically in the UK for UK-based staff), but also all the other activities which academics typically undertake including preparation, course marking, writing articles and Moreover, on many occasions, most of these additional activities will be undertaken in their home locations and this would, at least in a number of cases, represent more than 25% of their total working time.

So what?

Many institutions in the UK believe there is simply no way that a foreign social security administration can impose foreign social charges on them as an employer. However, this assumption is incorrect. Even if one ignored the risks of the foreign social security offices raising the matter via the individuals concerned, it could create real worry, anxiety and frustration. Specifically, the EU/UK Trade & Cooperation Agreement allows EU social security departments to ask HMRC to collect that country’s social security contributions from UK employers i.e., UK universities and colleges, where the institution has correctly registered and accounted for social charges automatically for employees.

Moreover, experience shows that foreign social security offices are becoming increasingly aware of the issues arising from international cross-border workers and are increasingly happy to ask HMRC to collect social charges in this type of situation.

Next steps

If you have professors, lecturers and other staff in this type of cross-border situation, as an employer you need to ensure that you genuinely understand what the working pattern of the individuals is and ensure that social security is accounted for in the correct location.

In addition, it would be sensible to ensure that you review and adjust your staffing budgets in this type of situation, as social security rates particularly for employers, differ significantly throughout Europe. For example, in some countries, employer social security rates can be around times greater than the employer NICs due in the UK.

Would you like to know more?

If you would like to discuss how the above may affect you, please get in touch with your usual Blick Rothenberg contact, or Robert Salter using the form below.