Remote Work & IT-Tech SMEs: Is WFH The Right Incentivisation?

In the wake of the global COVID-19 pandemic, remote and hybrid working has become the norm for many companies, even with the world finally being on the road back to some kind of ‘normalcy’.

 Not only is remote working a no-brainer for saving time and money on the daily commute (not to mention hosting many environmental benefits), but it is also ideal for those managing work and family commitments and is cost-effective in the office space rental department. 

However, like everything, it has its cons too, and can lead to tricky waters to navigate when it comes to tax and expenses. 

Now that the worst of the pandemic is over, many employers are harnessing remote working as incentivisation, and today, we ponder the question, ‘Is remote working the right incentive for IT-Tech SMEs?’.

Remote Work Incentivisation: Things to Consider

Company incentives are important for all organisations, whether big or small, particularly in growth spells when recruitment is the focus, but for SMEs (small and medium enterprises), there are things to consider when offering remote working as a perk.

Double Tax Agreements (DTAs) & Dual Tax Liabilities

A DTA is an agreement that is put in place between two countries to prevent an overseas (but UK-native) worker from being taxed twice for the same wages. 

When considering remote workers working in another country, you as a SME owner should acquaint yourself with the DTA provisions to ensure compliance with the tax laws from that country, as well as avoid any potential tax liabilities. 

Expenses For WFH Staff

Remote workers are still entitled to have certain expenses covered as tax-free reimbursements by their employer. This can include a portion of their central heating bill, lighting, and internet usage.

 Per HMRC recommendations, a £6 per week rate (receipt-free) is suggested for such expenses, but it is up to you as the employer to reach an expense agreement with your remote staff. This should also include work equipment such as phones and laptops.

Overseas Workers

We’ll break this section down into two categories: short-term and permanent overseas staff.

Short-Term Overseas Workers

For short-term overseas employees (typically those with contracts not exceeding 24 months), as in UK-based residents assigned to work in a foreign country for a certain period of time, these workers will typically be considered as UK tax residents and will still be expected to pay national insurance contributions, as well as certify their tax status while abroad.

Permanent Overseas Workers

Naturally, when a UK resident moves abroad permanently, their tax status will change. Depending on when in the tax year they moved overseas, split-year treatment may be applicable. 

When it comes to being a SME owner with permanent overseas staff, navigating the responsibilities that come with is challenging but imperative, and you are expected to fully familiarise and adhere to certain aspects, such as expenses, dual tax implications, and DTAs to comply with government regulations.

You’re also advised to be fully transparent with overseas staff (short-term or permanent) regarding tax regulations and requirements. 

Is Remote Working a Good Incentive? 

As an IT-Tech SME, if you’re considering allowing remote work as an incentive, here’s what to consider from both an employer and employee point-of-view.

Pros

• No commuting requirements
• Better work-homelife balance
• Flexibility & autonomy
• Increased motivation & productivity
• Less chance of staff turnover
• Less/no need for office space rental
• More eco-friendly/carbon-neutral

 Cons

• Potentially longer working hours
• Work-home life overlaps
• Potential feelings of isolation
• No face-to-face communication

Final Thoughts

Ultimately, the final decision as to whether or not you offer remote working as a business incentive for your IT-Tech SME is down to you.

While it can open up a few small challenges, it will also improve your team’s productivity, as well as open you up to a wider recruitment scope during periods of growth.And remember, for every tax challenge, there’s a solution – and the right people to provide all the guidance and support you need while managing the financial side of your organisation.

Disclaimer: The information presented in this blog post is accurate to the best of our knowledge and based on the latest available information as of the date of posting, which is 21st December 2023. However, please note that information, laws, regulations, and circumstances can change over time. Therefore, we cannot guarantee the accuracy, completeness, or currency of the information provided. It is always recommended to verify any information independently and consult with relevant professionals or experts for specific advice or updates. The authors and publishers of this blog post shall not be held liable for any errors, omissions, or outdated information, or for any actions taken based on the information provided in this blog post. Readers are encouraged to use their discretion and exercise due diligence in evaluating the accuracy and reliability of the information before making any decisions or taking any actions based on it.