ENGLAND & WALES Law and Practice Contributed by: James Ross, Paolo Palmigiano, Debbie Cloake, Helen Farr, Debbie Heywood and Louise Popple, Winston Taylor
• an elected employee representative may assist in conducting negotiations and requesting informa - tion from the employer. From October 2026, the ERA2025 will introduce the following reform of trade union laws: • statutory right for unions to access workplaces physically to meet, support, represent, recruit or organise workers or facilitate collective bargaining, and to communicate with workers both in person and digitally; • duty to inform workers of the right to join a trade union; and • enhanced protections against detriment short of dismissal for union representatives and employees who take part in industrial action. Employees are subject to income tax on earnings from their employment, which is charged at progressive rates of 20%, 40% and 45%. UK-resident individuals are generally taxable on their worldwide income; non- UK residents are taxed only on earnings in respect of duties performed in the UK, subject to any relief avail - able under double tax treaties. Previously, individuals who became UK residents after at least three years of non-residence were entitled to claim “overseas work - day relief”, whereby earnings from duties performed outside the UK were taxable only if and when remitted to the UK (the so-called “remittance basis of taxa - tion”). From 6 April 2025, the remittance basis was replaced with the four-year foreign income and gains (FIG) regime. The regime allows qualifying residents to claim relief from taxes on eligible FIG and is available for a maximum period of four consecutive years from when an individual became a UK tax resident. Relief under the regime can be claimed only on the following types of foreign income: • profits of a trade carried on wholly outside the UK; • profits of an overseas property business; • dividends from non-UK resident companies; and 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
• interest – eg, interest paid on a foreign bank account. Employers with a presence in the UK are generally required to withhold tax from payments to employ - ees, and to account for it to HM Revenue & Customs (HMRC) through the pay-as-you-earn (PAYE) system. Special rules apply to tax benefits in kind and earnings from employment-related securities (including share options). National insurance contributions (NIC; ie, social secu - rity contributions) are charged on employees who are present in the UK. These are currently charged at a rate of 8% up to the “upper earnings limit” (currently GBP967 per week) and 2% above that threshold. The employer is liable for secondary contributions at a rate of 15%. Employer contributions apply to benefits in kind, and both employer and employee contributions may apply to benefits from employment-related secu - rities that are readily convertible assets. The employer is required to account for NIC through the PAYE sys - tem. 5.2 Taxes Applicable to Businesses A company that is resident in the UK is chargeable to corporation tax on its worldwide profits. A non- resident company is chargeable to corporation tax on profits of a trade carried on in the UK through a per - manent establishment therein, as well as from profits of a UK property business and any profits from a trade of dealing in or developing UK land. A residual charge to income tax applies to the profits of a trade carried on in the UK other than through a permanent estab - lishment – in practice, this only applies to companies that are not resident in territories with which the UK has a tax treaty. For accounting periods commencing on or after 31 December 2023, the UK has implemented the Pillar 2 Income Inclusion Rule, known as the multinational top-up tax (MTT), and a qualifying domestic top-up tax. The undertaxed profits rule was introduced with effect from 31 December 2024. The UK imposes withholding tax on UK-source inter - est, royalties and certain other payments of a recur -
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