UK Law and Practice Contributed by: Paolo Palmigiano, Rachael Roberts, Helen Farr, Debbie Heywood and Louise Popple, Taylor Wessing LLP
the right to request a formal agreement to be informed and consulted on the operation of the business; and • an elected employee representative may assist in conducting negotiations and requesting information from the employer. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Employees are subject to income tax on earn - ings 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 available under double tax treaties. Previously, individuals who became UK residents after at least three years of non-residence were entitled to claim “overseas workday 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 taxation”). However, as of 6 April 2025, the remittance basis was replaced by the 4-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 consec - utive 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
• interest, such as interest paid on a foreign bank account. Employers with a presence in the UK are gener - ally required to withhold tax from payments to employees, and to account for it to HM Revenue & Customs 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 security contributions) are charged on employ - ees who are present in the UK. These are cur - rently 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 securities that are readily convertible assets. The employer is required to account for NIC through the PAYE system. 5.2 Taxes Applicable to Businesses A company that is resident in the UK is charge - able to corporation tax on its worldwide prof - its. A non-resident company is chargeable to corporation tax on profits of a trade carried on in the UK through a permanent 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 car - ried on in the UK other than through a permanent establishment – in practice, this only applies to companies that are not resident in territories with which the UK has a tax treaty.
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