UK may strip foreign GPs of a tax break

Non-domiciled partners working in the UK may have to start paying taxes on overseas earnings used locally if it turns out a second employer abroad is effectively the same entity as their UK employer.

The changes stem from reform to “dual employment” contracts that allow foreign workers in the UK to avoid tax if they also perform work overseas; for instance an investor relations director that performs marketing duties in the UK under one contract and work abroad under a separate contract.

Reforms made by UK tax authority HMRC would tax non-domiciled partners overseas income if the UK employer and foreign employer are the same entity, or in some way significantly connected to one another.

“In light of the changes we are seeing organizations review the dual employment contract arrangements they have in place,” said one UK-based employment lawyer, who added that he expects dual contracts to be used less frequently by private fund managers in the future.