Moving to Tier 1 - What happens to Tax benefits

[Devanshi]

Indian IT companies pay tax free allowances in first two years to intra company transferees. What happens to these tax benefit if one moves to Tier 1 Visa before completing two years?

Has anyone moved to Tier 1 from intra company visa this year?

[Sushil-ACCA]

Indian IT companies pay tax free allowances in first two years to intra company transferees. What happens to these tax benefit if one moves to Tier 1 Visa before completing two years?

Has anyone moved to Tier 1 from intra company visa this year?

GONE , AS new Visa conditioned will apply

[Devanshi]

Hi Sushil,

Are you sure, what conditions of new VISA makes it different ?

Has anyone experienced this?

[layman]

Interesing question. Know of a case where a person has come on Tier 1 but still receives similar allowances as a Tier 2 ICT employee. dont know how the 2 year dispensation clause works for the different visa categories though.

[ArgieBee]

The tax dispensation is based on the temporary place of work rules, so as long as the placement/deputation is for less than 2 years then it would still apply.

The UKBA recently indicated that they had found some sponsors were claiming the tax break but not paying it to their employees. So they were effectively inflating what they said they were paying on the CoS.

It does raise the question of whether tens of thousands of employees on tier 2 ict visas have been cheated out on thousands of pounds of tax rebates each year.

I would be very suspicious if your employer asks you to fill in a blank tax return form and name them as the beneficiary of any rebate.

[layman]

spot on ArgieBee. I am sure my employer does the same. What should be done in such case? Apart from the dispensation, first 52 weeks NI contribution is also discounted but the employer never mentions this as well

[ArgieBee]

I guess everyone should be getting P60s showing what has actually been paid gross. If this does not match the gross that should have been paid, then politely contact hr/payroll. If they try to put you off then threaten to contact HO/UKBA.

After that it depends how brave you are feeling and whether you are planning to leave anyway.

It might be worth contacting/joining a UK union like Unite.

[layman]

I believe the P60s do not show any allowances on which dispensation is being claimed so cannot know if the gross on CoS has been paid or not. Will have to check

[ArgieBee]

Both should be on payslips, but if you have the P60 and add allowances then you should get the gross.

[Sushil-ACCA]

Hi Sushil,

Are you sure, what conditions of new VISA makes it different ?

Has anyone experienced this?

New visa conditions applies - t1 conditions , if u break ( claims tax breaks ) u r breaking t1 visa conditions

[layman]

where can one find T1 visa conditions, especially related to any dispensation beneftis/tax breaks

[Devanshi]

Let me clarify one thing -

I am not talking about some tax refund you claim if you go back to India within two years and don't plan to come back in next 12 months.

I question is regarding Living allowances paid by Indian employer which are not taxed as they are allowances in the first two years. Not able to find any provision/ real life case where it can be established that it becomes taxable after moving to Tier 1

[ArgieBee]

If Sushil is an accountant then he probably understands the rules better than I do.

However I do not think the 'temporary place of work rules' depend on visa type, but do deoend on how long you will be at the site. As soon as it is likely to go over 2 years then the tax break no longer applies.

This is one of the reasons that staff get rotated before 2 years by many Indian IT companies. They also keep the tax saving rather than passing it to the employee so they can keep costs down and increase profits.