Indians on ICT Tier 2 visa exempt from paying taxes & NI

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Summary:Tax and National Insurance rules are heavily biased towards ICT tier 2 visa holder and to the dis-advantage of UK citizens. ICT tier 2 visa holders are exempt from paying National Insurance for the first year and so do their Indian employers.

Accomodation and other living allowance can make up to 70% of the salary & almost not subject to the income tax.

UK government seems to be generous towards India as it allows Indian IT companies to bring in thousands of Indian workers on ICT tier 2 visa.

In addition recently UK government took a sensible and fair decision to recover some of the cost to its NHS National Health Service from the migrants from outside the European Economic Area however again Indian IT companies staff on intra-company transfer (ICT Tier 2 visa) has been exempt from the NHS charges which is difficult to understand.

The Intra-company transfer (ICT) was intended to bring in experienced and specialist staff to the UK offices of a multinational companies but not to displace a suitable UK worker however it seems to be used otherwise.

Although the UK conservative government is becoming strict on immigration specially on non EU migration however ICT Intra Company Transfers route is wide open for exploitation by the Indian IT companies and as a results thousands of UK based workers are losing their job each year. Intra Company Transfers in the UK between 1997 and 2008 from India alone were -166,410.

One of the conditions of the ICT tier 2 visa is that the job must be for skilled migrants & not for the position which can be filled by local UK or EU residents. However most of the employees of the Indian IT companies are Indians and they are performing jobs which can be easily filled by using local UK residents. The UK’s Migration Advisory Committee (MAC) suggested to review the rules governing ICTs if immigration is to bring down to the tens of thousands a year. UK businesses are bringing in almost 30,000 non-EU workers a year + (Dependent who has right to work) which could be almost 60,000 to fill UK jobs under the ICT scheme as of now.

The Migration Advisory Committee (MAC) also highlighted the use of tax free allowances for accommodation and expenses being included in the salary calculations which suggest that migrants are being used to cut costs & replace British workers who have the equivalent or better skills which was not the purpose of the ICT. UK government rule of minimum salary cap of £40,000 will not work unless abuse of allowances is stopped by Indian companies. The allowances were only meant for people who were supposed to be in the UK for a period of few months and not for two years which is more or less standard norm for Indian IT companies. Migrant workers are paid in form of allowances instead of PAYE salary to reduce the overall costs to the Indian companies.

Related News:

Tech firms killing UK IT workforce by relax visa rules
Unlimited ICT tier 2 visa in the UK despite scarcity of jobs

Tax and National Insurance rules are heavily biased towards ICT tier 2 visa holder and to the dis-advantage of UK citizens.

ICT tier 2 visa holders are exempt from paying National Insurance for the first year and so do their employers. Accommodation and other living allowance can make up to 70% of the salary and are not subject to the income tax for first two years.

All UK workers expect is the level playing field for all and same ICT Tier 2 tax.

Updation:
The changes to the UK’s Immigration Rules introduced on 6 April 2017.

Tier 2 General
The minimum salary requirement for experienced hires in Tier 2 (General) visa category will rise from £25,000 to £30,000 whilst
the minimum salary threshold for new entrants will remain at £20,800.

For Tier 2 Intra-company Transfer (ICT)

The Immigration Health Surcharge of £200 per year will apply to applicants of Tier 2 ICT category and their dependents.

The accommodation allowances for a Tier 2 ICT migrant can now form only 30% of an applicant’s total salary package.

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