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Sam, Accountant
Category: Tax
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I am a contractor and work and live in Switzerland, where

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Hi, I am a contractor and work and live in Switzerland, where I own a Swiss limited company. I have now the opportunity to do contracting work in the UK, where I will conclude a contract with a freelancing agency. I would like to set up a tax efficient way to manage the contract. I heard that the double taxation treaty between the UK and Switzerland does not apply in this circumstance, as I am entering a contract with the freelancing agency and not directly with the client. Is there any other smart solution for this? I could of course set up a UK Ltd. or similar, but I am not sure whether this makes sense in my situation.
Thanks for your question- I am Sam adn Ia m one of the UK tax experts here on Just Answer.
If you will work this contract through an agency - then you will an employee of theirs (as per employment status legislation) so will have to be paid via the PAYE employment tax system - and suffer deductions of tax and National Insurance (Class 1) via their payroll.
The double taxation treaty merely ensures that you do not suffer tax twice on the same income,BUT does see you considered for tax under both regimes - its juts that your main tax position (will I assume will remain Switzerland) are permitted to give you credit for any UK tax suffered.(IT does not mean you are paid free of UK tax)
I am afraid there are no other ways to take this forward - you cannot create a UK limited company either independently or through an umbrella company (which many agencies think they are permitted to offer and stay within the UK legislation - which they most certainly do not)
And even if you were engaged by the client directly - your work may still fall into PAYE or under the Construction Industry scheme if you also then worked for other clients (at the same time - so you have to be not tied to any one engager at any given time)
On the basis of what you advise this is not going to be the case I am sorry to say
Customer: replied 3 years ago.

Hi Sam,

Thanks for your response. What I am currently not sure is how I shall proceed now? Am I allowed to bill the agency via my Swiss company? I understand the income my company receives is still different from my salary, so which cash flow will be liable for what tax? Say if my company bills the agency GBP 10000, and pays me only a low salary of say 1000 GBP per month while working in the UK, what income is taxable under UK law?

And if you say the DTA would stipulate that I can offset my total Swiss tax payable with the amount already paid in the UK, that wouldn't be too bad as it means I still only pay tax according to Swiss rates (which are considerably lower than the UK), and for me personally, I don't mind whether a proportion of that goes to the UK tax offices. Or am I missing something here?

By the way, regarding NIC, I would assume I can still stay under the Swiss system as I can second myself to the UK and provide the UK authorities with the respective proof (there is a so called form "A1" for this)?

Thanks for your response
Your first port of call needs to be with the agency and no you cannot bill the agency from your Swiss Company, you need to be an employee of the agencies to proceed with this work.
So ALL that the agency pays you will be subject to UK tax and Class 1 National Insurance
So every month for any money paid to you - the first £833.33 will be tax free (as this is your UK entitlement to tax free allowances) then anything from £833.34 to £2606.25 is liable to 20% tax and anything from £2606.26 to £12500 is at 40% - and anything over £12500 is at 45%
(Plus any income in excess of £100,000 a year sees a loss of personal allowances)
Then you have National Insurance - the first £481 a month free (from the gross payment) then any remaining income at 12%
You cannot use the form A1 for this new source of income - as this is pay from another source (other than from your limited company) that arises in the UK - remember this will NOT be able to be paid to your limited company in Switzerland and you are not seconding yourself to the UK - you are coming to the UK to take up work from a UK source.
You also ask regarding the offset UK tax against your Swiss income - then if the Swiss rates are lower than that of the UK - then you will not suffer any further tax liability in Switzerland.
Sam and other Tax Specialists are ready to help you