Review of Hybrid and Distance Working by the Office of Tax Simplification

The Office of Tax Simplification (OTS) is conducting a review on the trends and tax implications of hybrid and distance working in the UK and across borders. The focus of the review is to look at changes in practice and any emerging trends away from the 'traditional' way of working.

From the outset of the pandemic, the UK has seen a huge shift towards hybrid and distant working as technology has enabled many employees in certain roles to work remotely instead of in an office. For some, this included employees working overseas.

The review is planned to observe and consider the extent of changes in working practices giving rise to tax complexities or challenges, and will look at:

• the current extent of hybrid and distance working and the likelihood of this increasing in future;

• what working arrangements means for tax, social security, tax residence, and permanent establishment;

• how accommodation, travel, and other expenses actually work in a hybrid world

• the application of short term business visitor rules, overseas workday relief, and modified payroll; and

• the treatment and impact on pension contributions and share schemes;

• the risks or otherwise of creating permanent establishments or changing corporate residence.

We have seen many organisations receive requests from employees to work remotely not only within the UK, but also internationally, and there are multiple considerations employers must thoroughly consider before agreeing to any overseas working, for any length of time. Whilst the OTS review may trigger the Government to take forward some reforms, any such changes will take several years. The deadline for submissions is 25 November 2022 and we shall continue to monitor any updates from the review.