What are you doing about your UK Expat Freelance talent in Europe? IR35, Brexit, COVID19 what does it mean?
With the small matter of a global pandemic to contend with what the labor market really needs is a couple of other major events to shake up an already challenging job market..... Enter the full implementation of IR35 to the UK labor market and Brexit ( remember that?) The majority of you probably think that not being in the UK that's not really going to affect us. Well if you combine all 3 and use any UK labor on a project onshore or offshore then it probably will and that could be an advantage or disadvantage depending where your project is.
Firstly what's really going on. Lets take it one at a time:
1) COVID19, what more needs to be said, borders are hard to cross, embassies and governments all have different policies and it is now 3x as costly to move labor. It also means that labor will not rotate on projects as much meaning the majority of assignments will be longer and the labor source will need a visa and tax residency in the location of the project. This means local tax and a higher rate than rotating labor in and out so they do not cross the threshold to tax residnecy. Full work permit and payroll solutions are required from day 1 mostly and although some suppliers are still chancing any visa ( tourist, business etc) apart from nullifying insurance workers are being denied entry at customs. So COVID19 has made moving around hard and very expensive, not really new news .
2) Brexit . Yay, wonderful idea this. Aside from my personal belief this is the dumbest thing the UK has done to itself since the Spice Girls , COVID19 has kind of delayed the effects to the everyday Brit Freelancer. But we are seeing the sign of things to come. UK labor has been used on many engineering projects in the EU and globally for years. We love to build things and travel so no wonder most sites will have a British engineer somewhere wondering where the nearest pub is. The problem with Brexit is we can't just wander off anymore. We need a VISA to go and work in the EU and vice versa. Most countries are charging €2000-3000 for visas. Work permits means tax residency and than means a higher employers cost. So if you want that UK labor its going to cost more, quite a bit more.
3) IR35 . Did I say Brexit was the dumbest thing we did to ourselves? Well IR35 , for all its well meaning is poorly timed. Delayed and then rushed in, this piece of legislation means UK workers who act as their own businesses with their own skills need to pass a means test to keep their LTD status. The threat of fines is driving many companies and workers to just go PAYE ( that is paying full tax as if they were a permanent employee),which is the Governments aim ,to increase tax revenue. Most of the Expat engineers also do UK work . They are not location specific but engineering project specific. Think Offshore workers, Electrical Turbine engineers, Rail project engineers etc. If you have a UK project you are very aware of this, in fact it has started a brain drain.
You combine all of these things and UK Freelance expat labor is trapped. They can't work in the EU without being expensive and can't work in the UK without also costing their clients more and paying full PAYE tax. So whats going to happen? Well things will work out over time I'm sure but in the short term if you have projects outside of the EU its an ideal time to move some UK labor in where they can still work as LTD company freelancers. If you are in the EU EWI can help advise on the most cost effective way to source your labor. Our Global Mobility Team and Tax team have had to work all hours to provide new solutions to our clients and candidates. The best advice as always is plan ahead. We can source labor for any project, we have done so in over 70 countries in the last 5 years ,that's actually the easy part. Figuring out a compliant solution that safeguards all parties is the hard part. As always we are here to help, happy to talk through your project requirements and meet the challenges together over the next 1-2 years while the world gets back to normal ... we hope!