Pay Part Onshore and the Rest Offshore

Split Payroll

Some organisations have been known to structure Income payments between ‘Onshore’ and ‘Offshore’ by running a spit payroll.

In such cases a basic salary is paid in the UK (normally around £12,000) and the rest of the money is directed overseas and paid to the individual subject to lower rates of tax.

This structuring is about tax evasion; the underlying fact remains that all the money concerned is remuneration for work done in the UK, and so is taxable in the UK; the splitting of the payroll does not alter the UK tax liability, although the scheme promoters may try to suggest otherwise.

Genuine ‘Offshore’ Work

If a person is tax resident in the UK then any income arising from offshore work is taxable in the UK. Therefore if a UK domiciled and tax resident individual went to work on a contract in Singapore for 3 months and received payment in the respective jurisdiction they would be required to detail this income on a UK tax return and pay any respective taxes on worldwide income (if there is a suitable ‘Double tax treaty’, credit may be given for tax paid ‘locally’ in the non-UK jurisdiction).

However, if a person is Not UK domiciled, or UK tax resident and they come to the UK on a temporary work visa and then take a contract in Singapore for 3 months then they may be paid onshore for any work undertaken in the UK and offshore for any work undertaken in Singapore. NB International tax and residence / domiciles issues are complex; you should not rely on this article in making any decisions; it is strongly advised that you take professional advice on your individual circumstances before proceeding with any actions.

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