HMRC looks at allowances and if they fall within their guidelines as legitimate business expenses they can be claimed back, such allowances are not salary and subsequently no NI or tax will be due. The UKBA takes a different view which is against the advice of the Migration Advisory Committee. As far as they are concerned as an ICT migrant worker then your tax free allowances are considered part of your salary. It is the UKBA way of helping companies meet their visa rules with their new £24k limit. The UKBA policy is to ensure such companies and their workers can enter the UK and pay the minimum tax and NI compared to resident workers and their companies. If this was not the case the UKBA (Government) would have taken the advice of the MAC on the treatment of allowances and excluded them from salary. They would leave the enforcement of allowance claims to the professionals at HMRC who have the data, IT systems, management information and procedural mechanisms necessary.

The FOI request below confirms that unlike the UKBA, HMRC treats an allowance on its merits and not on who is claiming it.

 

HMRC - FOI (KMM13735005V79095L0KM)

 

 

Date:    Thu, 16 Dec 2010 11:19:05 -0000 [2010-12-16 11:19:05 BST]

From:   markframpton@hmrc.gsi.gov.uk

To:         peter@allbureau.com

 

Subject:               Freedom of Information Act 2000

 

Dear Mr Kellard,

 

Freedom of Information Act 2000

 

Thank you for your request for information about non-EU migrant workers coming to the UK for less than 12 months.

 

You asked what concessions or exemptions HMRC offers in terms of NI (Employers and Employees)?

Are there any concessions or tax free payments for living expenses?

Are there any other concessions not included above?

 

Your request was received on 25th November 2010 and I am dealing with it under the terms of the Freedom of Information Act 2000.

 

Under section 21 of the Act, we are not required to provide information in response to a request if it is already reasonably accessible to you. The information you requested is available on the Department’s website (www.hmrc.gov.uk).

 

In the main, non-EU migrants are not a group that is recognised separately from the general population in the legislation or in concessions and there are no separate concessions or exemptions available specifically to them. The various exemptions and concessions available to employees, their employers, including non-EU migrants depend on the facts of the particular case and are set out in HMRC's guidance for employers: www.hmrc.gov.uk/guidance/cwg2.pdf

 

In particular I recommend: www.hmrc.gov.uk/guidance/cwg2chapter4.pdf

 

HMRC also publishes separate guidance in relation to the National Insurance rules for company directors: www.hmrc.gov.uk/nitables/ca44.pdf

 

Page 34 of this guide deals with a special concessionary rules for certain visiting directors.

There are certain exemptions from liability for National Insurance that are of particular interest to persons that come to the UK temporarily from abroad from outside the EU and which may include some people within the group you have in mind. These rules are contained in the UK's network of social security agreements with other countries and for certain people coming to the UK from outside the EU where a reciprocal agreement does not apply, and under Regulation 145 of the Social Security (Contributions) Regulations 2001 - [SI 2001/1004].

 

You can find guidance about this on our website: www.hmrc.gov.uk/nic/work/index.htm

Copies of the contributions regulations and bi-lateral agreements are available from the Stationery Office although I recommend DWP's website for free copies of individual bi-lateral agreements. www.dwp.gov.uk/publications/specialist-guides/law-volumes/

 

There are no specific concessions or allowances in relation to the living expenses of non-EU migrants. Payments of living expenses are earnings and should be included in gross pay. However, you may find it helpful to look at the assistance we provide to employers and others about tax allowances and about which expenses are allowed: www.hmrc.gov.uk/incometax/tax-allow-ees.htm and www.hmrc.gov.uk/guidance/cwg2.pdf I particularly recommend CWG2 Chapter 4 at section 116.

 

If you have any queries about this letter, please contact me. Please remember to quote the reference number above in any future communications.

 

If you are not happy with this reply you may request a review by writing to HMRC FOI Team, Room 1C/25, 100 Parliament Street London SWIA 2BQ or email foi.review@hmrc.gsi.gov.uk . You must request a review within 2 months of the date of this letter. It would assist our review if you set out which aspects of the reply concern you and why you are dissatisfied. If you are not content with the outcome of an internal review, you may apply directly to the Information Commissioner for a decision. The Information Commissioner will not usually consider a case unless you have exhausted the internal review procedure provided by HMRC. He can be contacted at The Information Commissioner’s Office, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.

 

I trust you will find this reply helpful.

Mark Frampton
HM Revenue & Customs
PAYE, SA & NIC Group
Chillingham House
Benton Park View
Longbenton
Newcastle Upon Tyne
Tyne & Wear

NE98 1ZZ