Flybe pilots could be liable for UK tax
Tuesday 13th July 2010, 2:56PM BST.
Flybe pilots and cabin crew may have to pay UK tax
JERSEY pilots and cabin crew who work for Flybe could be forced to pay UK tax – even though they live in Jersey and already pay income tax in the Island.
The airline told its crew last week that they would have to make deductions from the July payroll after a ruling made by HM Revenue and Customs.
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I think a person’s tax residence is usually decided by where the person spends most nights. Could the airline adjust its shifts so that the crew spend less than 182 nights a year in the UK?
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James #1 – That would mean putting on more flights… what you suggest is sacrilege.
Seriously though its not just HMRC et al the IRS and all major tax collectors are looking at getting their fingers on money earn’t wherever.
I believe Usain Bolt has pulled out of a major UK athletics tournament because HMRC wanted a percentage of his earnings for participating AND his annual earnings from sponsorship etc..
Not just Philip Ozouf who wants to get his fingers on your wallet.
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Blow me! if its not the States its the UK govt wanting more money.
…and Jersey keep allowing this to happen.
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The problem is that the crew are employed by a UK company, and as such must pay UK tax for work they do in the UK.
The double taxation agreements between the UK and the Islands (and I include the IOM here where the Flybe crew are similarly affected ) are old (1950′s) and do not cater for this specific circumstance of non UK resident aircrew starting their days in the Islands who have to fly to the UK daily.
They need to be updated.
Why should you pay taxes to a state that gives you nothing back ?.
It’s taxation without representation all over again !.
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Yet UK resident crew won’t be paying Jersey income tax. Flybe could solve this by employing their Jersey cohort through a jersey-registered subsidiary, it used to exist as this article mentioned (Jersey European), or have they forgotten where they came from?
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The proposed UK sourced double taxing of Jersey residents, just because they work for a now UK based airline, as in the Flybe case is another attempt to denigrate the validity of Jersey’s tax system and its clear independence from the UK. Watch out for the proposed UK tax on air travel and shipping, which will affect islanders, whom have no choice.
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1. James
Nearly. It actually depends on how many times you ‘land’ in the UK. I.e. the powers that be believe that every time you land there, you are doing a day’s work there… As far as I can work out.
Certainly, Jersey based Flybe crews do not ‘nightstop’ in the UK. Ie (unless things go a bit wrong) they will start their day in Jersey, fly to the UK and back a few times, and finish the day in Jersey.
You think someone would be slightly sensible and arrange some sort of exception for air crews… I’m pretty sure it’s a problem that will be rectified soon.
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At the moment, it’s got nothing to do with spending a day there – it’s any time you are in the UK working for a UK Company you have to pay tax there. As I understand it the UK are only taxing crews on the proportion of their work done in the UK. The rest is being taxed in Jersey.
If you were employed by a Jersey Company, you would, provided that Company was genuinely managed and controlled in Jersey, depending on the number of times you visited the UK (less than 184 days) be protected from UK tax by the double taxation agreement.
The goalposts have been moved by HMRC regarding day counts – they used to count a day as a day if you were there at midnight – it’s now changed so that any time you are physically present in the UK, a day is counted – so, even if the Crew were employed locally, most would still be liable to UK tax.
It is only current UK domestic law which is preventing jersey crews from paying 100% UK tax.
The sword of Damocles hangs above.
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Is this an issue specific to Fly Be or does it affect crew working for other airlines, such as British Airways.
I am aware that some BA pilots live in Jersey – This is an interesting issue.
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The BA pilots who live in Jersey will be paying UK tax for the work they do in the UK already. Typically 15% of their salary for long haul and 30% for short haul is taxed in the UK – the rest is paid to Jersey.
The difference with the Flybe Crew is that they start and end their days on the Island – they don’t commute.
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7. John. I am no expert but if what you are saying is correct, surely the simple rectification is for Flybe to establish a local subsidiary for the purpose of holding the employmnet contracts for Jersey resident pilots?
That said, Flybe pilots should note that if they give up their UK contracts they may lose their rights and protections afforded to them under UK law. They should negotiate these Jersey contracts carefully.
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Just read 8. Seems like the local subsidiary concept won’t work. Sorry chaps. HMIR always get their man it seems.
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Don’t pilots earn enough to pay tax consultants to minimise the impact?
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Not sure about other places but Guernsey pilots won’t lose out too badly. On the basis that they are not tax resident in the UK they should be able to get double tax relief in Guernsey.
Their earnings from the part of their duties carried out in the UK will probably be within the UK basic rate band of £43,875 (including personal allowances)and therefore they will effectively pay tax at less than 20% in the UK on those duties.
Double tax relief in Guernsey may not quite match the tax deducted in the UK but it will be pretty close, meaning in the long run the total tax the pilots pay will be broadly the same.
The main annoyance will be completing the UK tax forms
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Pilots earn all they are paid !
With announcements today that Senator Ozouf is attempting to raise another £22m in taxes, a good start would be to keep in the Island what belongs here !!
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What if the crew, being Jersey through and through, has the Non EU work restriction in their passport, should they be be working for flybe?
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