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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi, Were a UK business who are looking to employ a british

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We're a UK business who are looking to employ a british national who is currently living in Australia. The potential employee has been in Australia for 1 year and is currently on a 457 Visa but is looking to change to a permanent skilled migrant visa (189).

I've researched the tax implications of employing (as in putting the employee on our UK payroll) versus contracting but it's inevitably a complex situation.

Could anybody provide any clear guidance on this please?


Thanks for your question

I can advise the UK tax position, but I would also suggest that you post a further question within the Australian Tax law section of Just Answer, for his tax position there.

If you would like me to proceed with the UK tax position, could you advise, will all this employees duties be carried out in Australia or will he return to the UK

What sort of duties will this employee perform - as to engage him as a sub contractor has strict rules regarding employment status to. For example -
Will he be employed with any other company - what hours will he work, will he find his own clients, could he make a profit or a loss on his work with you - will he use his own tools/business equipment


Customer: replied 4 years ago.

Hi Sam.

Yes please proceed with the UK Tax position.

In answer to your questions:


We're a website development agency, so the employee will be a developer working on prescribed work/projects/tasks set by us.


He won't be employed by any other company, he would be our employee but based in Australia at 37.5 hours a week. So no seeking own clients/sales and no profit and loss made.

In the short term he would likely use his own (computer) equipment but medium longer term we would provide (assuming tax implications wouldn't be an issue with this)

All duties carried out in Australia - if he ever did return to the UK it would be vacation to see his family.


The above is obviously if we went down the employee route versus contracting.








Hi Steve

Thanks for your response

The its a simple matter - based on what you advise this will be an employee, and that is how you should proceed (with completion of form P46) - but then he should complete form P85. Although the form asks questions as if the UK employee is to leave the UK (rather than already been out of it long before this employment began!) the principal allows HMRC to see that
1) This employee is not living in the UK
2)Will carry out ALL duties out of the UK
3) Can be awarded code NT (NO tax) so all income can be paid tax free
4) They will also need to complete self assessment after each 5th April so that HMRC can satisfy themselves that code NT continues to apply.

Let me know of you need a link to form P85 or have any further questions



Sam and other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Brilliant, thanks very much

Hi Steve

You are very welcome, please do take the time out to rate/accept my answer, and do come back to Just Answer if you have any further UK tax questions, you can always ask for me Sam Tax, if you would prefer (just ask for me in your opening post and the other experts will know you are happy to wait for me to answer)


Thank you for the accept, much appreciated