Is a Work-from-Anywhere Policy Right for Your Business?
Offering a “work-from-anywhere” policy sounds like the ultimate employee perk, freedom, flexibility, and a chance for your team to soak up some sunshine while staying productive. But before you wave them off with a cheery “Have fun in Bali!”, there are some important factors to consider.
Working abroad, even for a short time, isn’t as straightforward as it might seem. Tax rules, legal obligations, and operational challenges can quickly turn that dream into a bit of a logistical headache. Here’s what you need to know to make an informed decision.
1. The Operational Impact
The first thing to consider is how this arrangement will impact your business.
Time Zones: Will they still be able to attend meetings or collaborate effectively with the team?
In-Person Needs: If you occasionally require face-to-face meetings, who covers the travel costs for them to return to the UK?
Connectivity: Can they reliably access high-speed internet from their chosen location?
While the idea of working from anywhere is appealing, these practicalities can make or break its success.
2. The Duration of Stay
The length of time your employee plans to work abroad matters.
Less than 6 months: They’ll likely remain UK tax residents, which means they’ll still be taxed on their worldwide income.
More than 6 months: They may qualify as non-residents for tax purposes. This could mean they aren’t taxed on their non-UK income, but National Insurance contributions might also be affected, depending on the country.
Duration also plays a role in determining whether local tax rules apply. Which brings us to...
3. Local Tax Rules
Every country has its own tax regulations. In some cases, employees may need to pay local taxes even if they’re only there for a short period.
For example, certain countries require individuals to register with local authorities, while others may enforce taxes based on residency or income thresholds. If your team member hasn’t looked into this, they could find themselves facing unexpected tax bills or worse, penalties.
4. Double Taxation Agreements (DTAs)
The UK has agreements with many countries to prevent employees from being taxed twice on the same income.
Sounds like a win, right? Not so fast. DTAs don’t mean employees are completely off the hook, some local taxes may still apply. Make sure you’re checking the specific rules for the country in question.
Our Recommendation
If working from anywhere is on the cards for your business, here’s how to manage it without losing sleep:
Set a Clear Policy: Include expectations like maintaining UK working hours (if necessary) and the maximum duration an employee can work abroad. A robust policy helps avoid confusion and sets boundaries from the start.
Do Your Homework: Requests to work abroad can be admin-heavy, so ask employees to do some of the legwork. They should research the tax and legal implications (based on the points above) and submit this information as part of their request. This makes it easier for you to assess whether specialist advice is needed.
Seek Professional Advice: This is a complex area, and even well-meaning policies can lead to issues if the details aren’t ironed out. Getting professional tax advice for both the business and the employee is a must.
Final Thoughts
A work-from-anywhere policy can be a brilliant addition to your benefits package, but it’s not a decision to take lightly. By considering the operational, tax, and legal implications upfront, and setting clear expectations, you can make it work for both your team and your business.
Need help putting together a policy or navigating the admin? That’s what we’re here for! Drop us a message, and we’ll help you take the stress out of the process.