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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am an employee of a small german company. They want to pay

Resolved Question:

I am an employee of a small german company. They want to pay my salary as a gross amount and asked me to sort out the tax and NI in the UK. What is the best way to do this
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you elaborate on your work situation a little please. Do you work for the German company from within the UK? Are they saying that they want you to work for them on a self-employed basis? How is your tax dealt with as of now? Do you pay German or UK tax and NIC?
Customer: replied 2 years ago.

I started with them on the 1st November. I am based in the UK and do most of my work in the UK. However I travel a lot for my job. International sales director.

I have not paid any tax or NI yet and am trying to work out the best solution

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.
I cannot help you with the German tax situation or what attitude the German tax authorities will take towards your employer.

As far as UK tax is concerned, in circumstances such as yours where you employer has no presence in the UK you should set up a Direct Payment PAYE Scheme where you operate your own payroll scheme and pay over the tax and NIC on your salary. You can find extensive information on the scheme here though you may find it easier to call the employer helpline to get a scheme set up.

HMRC might require you to register for self-assessment and you can do that from here.

I hope this helps but let me know if you have any further questions but I will be away from my desk unil about 3pm to 3.30pm.
Customer: replied 2 years ago.

Would it be better to register as self employed

Expert:  TonyTax replied 2 years ago.
You could register as self-employed which will allow you to claim more expenses and avoid having to operate a PAYE scheme but I would have thought your employer reimburses your business expenses in any event. HMRC may also attack your self-employed status since you will only have one client but the fact that the German company is beyond the reach of HMRC in the UK may make it difficult for them and I'm not sure that would be able to force you run a PAYE scheme if you were not actually an employee of the German company.

If you set up your own limited company, you could draw dividends and a smaller salary as there is no NIC charge on dividends, hence savings to be made, there is though the spectre of IR35 which you can read about here.
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