Employers call for clarity over hybrid working tax rules

A new report from the Office of Tax Simplifications shows employers are keen for greater clarity and guidance over the tax and social security issues linked to hybrid and remote working.

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Employers are calling for a review of the expense and benefits systems which are tied to older ways of working and not suited to more flexible working patterns, according to a new report.

The report from the Office of Tax Simplifications says adding additional tax reliefs for hybrid and remote workers would be costly, but adds that “new ways of working present the opportunity to reconsider the approach to employee tax reliefs”.

It says employers are also keen for more guidance and clarity on tax issues for non-traditional ways of working, in particular short-term working abroad. For instance, they are asking for HMRC to improve guidance on hybrid working to help both employers and employees.

ONS surveys suggest that about 40% of the workforce is able to work from home and the evidence is that many are splitting their working time between home and office-based working, but there is limited advice for employers on the tax implications.

The report says that employers believe hybrid working is here to stay, although approaches to it may develop.  Almost all employers it asked offer some homeworking.

On working abroad, the report says that, although the option is not taken up by many, it is seen by employers as a crucial business policy to attract and retain staff. Businesses are also permitting a small number of individuals to live and work overseas on a long term basis whilst the benefit of their services is mainly received in a different country.

However, the social security and payroll implications are complex and the UK’s position on related tax issues is seen by employers as unclear. They want to see improved HMRC processes, turnaround times, more PAYE relaxations and better guidance​. Meanwhile, multinational businesses want to see the UK taking a lead on how permanent establishment and transfer pricing interact with staff who choose to work overseas on for personal reasons and longer term, and where possible, employers would like the UK to set out unilateral guidelines that can be clearly understood.

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