Accounting Industry

How to Support Your Umbrella Company Paying Overseas Staff

People turn to a career in contracting for all kinds of reasons: the flexibility, the ability to set your own terms, and the enormous potential client base.

With opportunities for remote work abound post pandemic, the lure of overseas contracting can be even stronger -- because your office and your clients can be literally anywhere in the world.

While the work can be appealing – the tax and government obligations can be confusing. That’s where your umbrella company can carve its niche as an umbrella company paying overseas staff.

In this article;

Why set up your umbrella company for paying overseas staff
What do you need to advise your clients when working overseas?
What does my umbrella company need to know about paying overseas staff?

Why set up your umbrella company for paying overseas staff

1. Expand your base

As remote working becomes increasingly popular, more contractors will be seeking out this niche. But not every umbrella company has the appetite to become educated about how simple making overseas payments could be.

2. Work with new business

With labour shortages rife globally, companies will be looking overseas for short term assignments, particularly with seasonal work in agriculture for example. As an umbrella company in this field, you can expand your business – to work for these type of business and get annual repeat work for companies looking to hire season overseas staff.

3. It’s not that hard, really

With the right payments partner who can advise you on currency strategy and may payments in just about anywhere in the world – the technical part of the payment can be done for you.

What do you need to advise your clients when working overseas?

1. There are extra complications when contracting overseas

Contracting abroad isn’t as simple as signing up for a job, booking a flight and packing your bags. Clients may not be able to use your own UK limited company and in some countries will have to be registered for tax purposes. Where and to whom should you pay tax? How will you get paid? Are you aware of double taxation? How long can you work in that country for? Without expert help it’s easy to pay too much tax or attract attention from the local tax office.

2. Governments talk

It’s important that you educate your umbrella clients - with every country tightening the way they gather tax and social security, clients must make sure they’re paying taxes correctly to avoid fines, penalties, and even criminal charges.

3. Visas may be required

Does your client have a right to work in a particular country? If a visa is required they may need specialist help. Countries are protective of their own workers rights and working without permission is not advised.

What does my umbrella company need to know about paying overseas staff?

1. Follow HMRC Rules

HMRC is clear. How you calculate and pay PAYE tax and National Insurance contributions for employees who work abroad depends on where they’re working and how long you expect them to be working there. Employees who spend most of their time abroad over a period of a year or more may be able to obtain full UK tax relief on their earnings. When your employee goes abroad, give them a letter stating:

The date they went abroad to work
Their gross pay from the start of the tax year to the date they went abroad
The tax deducted from the start of the tax year to the date they went abroad

See more at HMRC

2. Consider local currency payments

If your client is living in a country that uses a different currency, it could be a real benefit to them to offer to be paid in local currency so they can use their salary quickly.

Consider also the possibility of offering split salary – after all, why shouldn’t the client be able to receive some of the salary in British pounds to save back home, and some in local currency to use day to day?

Savvy Umbrella companies see how their offer can do all the calculations required for the client, simply paying them where they are asked too – including split accounts and of course all HMRC and National insurance obligations that may still apply.

3. How You Transfer Money Overseas

Now that you’re ready to pay your clients you need to work out how to reliably transfer money. While using your bank might be a more convenient option, it may also be more expensive. Consider using a specialist payments company that has experience with currency transfers. If you choose a company local to you in the UK, you can demand service local to you

Speak to Caxton, the Umbrella company payment specialists, with local customer service and international expertise. Get two extra days for payroll. Access to the Faster Payments system gives you near-real time payments. Client's report being able to extend their payroll processing window by up to 3 days, not possible using BACS alone. But not just that - the system is able to process payroll 24/7/365, which makes managing weekend and public holiday pay far simpler for your team process.

Was this article useful? Try:

If you're looking for more information on finance and accounting then check out our Accounting Industry Articles or our Accounting Hub.

Caxton Payments

Caxton Payments is an alternative to traditional banks, established over 20 years, we help businesses make faster payments more reliably. We offer streamlined processes, automation through API and a collaborative solution to complex payment issues all from a single platform. Our payment capability extends from business expense management, to payroll payments, supplier payments, and currency risk management. We also offer personal prepaid travel cards and international money transfer.