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Employing Staff from Other Countries: Some New Pitfalls

Photo of Lourens Du Plessis Lourens du Plessis
3 min

Visas, employment and immigration can be very complex, with many loopholes, snares and hurdles to navigate. This also applies for Christian charities working with those from overseas. There may be one Kingdom, but we still have to comply with sometimes confusing national immigration rules.

At Stewardship, we’ve recently seen a couple of instances where churches and charities have run into unexpected difficulties regarding the employing of staff from other countries. This article isn’t a comprehensive guide to all the issues and legal matters that might be relevant (and we would strongly encourage anyone with questions to speak to an employment or immigration lawyer), but it’s worth being aware of some of the potential issues if you employ, or are planning to recruit, staff from abroad.

Firstly, the employer needs to apply for a sponsorship licence before the potential employee can apply for a visa – and the type of licence depends on the visa you want to sponsor (i.e. long term, such as Minister of Religion, or short term, including other types of religious workers). This is something the Charity Commission has also highlighted in their updated guidance for trustees on managing faith charities.

More likely to trip churches and charities up, however, is the issue of who pays for those visas, and what the tax consequences are. The initial visa (i.e. to bring a Christian worker/pastor/missionary) to the UK is generally considered by HMRC to be a valid expense for the charity. Without getting too technical, they essentially consider it to relate strongly to the travel needed to come to the UK, and therefore as a proper expense for the charity. More difficult is the situation where a visa needs to be renewed. In that case, the situation we generally see is that HMRC considers the visa to be a cost for the employee, as they have to personally apply for the renewal (not the sponsoring employer), and the individual benefits from being able to continue in the position. If the charity pays the visa cost, it is usually a taxable benefit for the employee, and gives rise to national insurance and tax consequences.

Both situations are addressed in the HMRC employer bulletin for December 2018 (page 4)

The relevant extract is:

 Visa Costs for prospective and existing employees inside the UK

However, these payments will be liable to income tax and NICs when the applicant is already in the UK, because such costs cannot be regarded as “provision of travel facilities”. They also do not meet the general deduction rules under s.336 ITEPA 03 because such costs are not incurred “in the performance of the duties of the employment” as they merely put an employee in a position to eventually perform those duties.

This previously didn’t affect ministers or staff from the EU but, following Brexit, the net for application of these provisions has now widened. Again, if you’re concerned – especially if you have already paid for a visa renewal and suspect you may not have handled the tax consequences correctly – contact a tax specialist or employment/immigration lawyer. If you are a Stewardship Payroll Bureau client, they may be able to assist you in setting things right.

Common Tax Pitfalls for Churches and Charities

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Written by

Lourens du Plessis

Lourens leads our teams who guide and strengthen churches and Christian charities with their governance and finances. Our professional services include independent examinations of charities’ accounts, an award-winning payroll bureau, consultancy and governance advisory services and helping charities get registered with the Charity Commission. He joined Stewardship in 2020 and brings with him a wealth of experience in both the charity and commercial sectors. He’s a member of the Charity Community Advisory Group of the Institute of Chartered Accountants in England and Wales, and regularly interacts with regulators in the sector.

Before joining Stewardship he worked for an international church developing governance and financial stewardship for various ministries. Prior to that Lourens had a senior role at a Big Four firm in the City, advising international investment banks. He is a qualified Chartered Accountant and has a postgraduate degree in Theology.

Lourens grew up in South Africa, but has spent the majority of his working life in London.  He is a member of the International Presbyterian Church in Ealing. He is also a trustee of a number of other churches and charities, including a new pregnancy counselling centre, and he’s involved in initiatives to help Christians better integrate their faith and work.

Lourens supports causes which encourage bringing the gospel to people in his neighbourhood and to the ends of the earth, and particularly supporting persecuted Christians around the world.