UK expat contractors with own companies face tax shock

New Inland Revenue regulations governing personal service companies may cause increased tax burdens for expat single owner businesses.

The new tax laws, brought in on 6 April this year, will affect oil workers on contracts as well as other single-owner businesses.The focus of the changes is on the individual whose right it is to ‘supervise, control and direct’ (SDC) the contractor on-site, even if the right is not used. Should a third party have an SDC right, a raft of new tax measures will apply.

Firstly, contractors working for third parties, umbrella companies or recruitment agencies will not now be able to claim travel or accommodation costs, thus losing tax relief on expenses incurred. Personal service companies not covered by the SDC test are now treated under IR35 rules, in that contractors must pay National Insurance and tax on the deemed amount earned from each contract. For overseas contractors paying social security and taxes abroad which are offset against UK payments under double taxation rules, the issue is far more complicated. – See more at: