Thank you for your further letter of 10 February on behalf of readers of your website, about Intra-Company Transfers (ICTs). I am very sorry for the long delay in responding to your correspondence.
The Government can (and does) control ICTs in ways other than including them in our annual limit, to provide the flexibility which encourages businesses to invest in the UK, while preventing the route being used to fill regular long-term jobs which could be done by UK workers.
The changes we have made, which took effect from 6 April, mean that only managers and specialists paid £40,000 or more can come as an ICT to the UK for more than 12 months. In many cases there will be genuine business reasons why multinationals need to transfer other existing staff for short periods, for example to take part in graduate training programmes. We therefore allow such short-term transfers, but workers must be paid at least £24,000 and can only come to the UK for a maximum of 12 months. They must then spend a further 12 months outside the UK before they can return.
As I mentioned in response to another recent letter, employers of ICT workers do not derive advantage from tax benefits that are not available to employers of resident workers in equivalent circumstances. The rules on, for example, temporary workplace relief apply to ICT workers in the same way as they would apply to a worker transferred between workplaces within the UK.
It is true that some short-term transferees may qualify for exemption from National Insurance contributions in the UK. However, it is likely that a worker who meets the conditions for exemption, and/or their employer, will continue to make social security contributions in the country from which the worker has been posted. So, an employer who does not incur NI costs in the UK does not incur no NI costs at all. These may, furthermore, be higher than those that would be incurred here – the UK has low contribution costs compared to similar economies.
A key reason these exemptions are in place is to prevent foreign workers who are here temporarily gaining the benefit rights which accrue from paying social security contributions. There would not necessarily be an entirely positive benefit to the Exchequer if ICT workers were required to pay NI contributions in the UK.
All ICT workers must be paid at least the appropriate salary rate that is paid to resident workers for the particular type of job in question, as set out in the UK Border Agency’s codes of practice for sponsors. These rates are applied to the gross salary package paid by the sponsoring employer. If, as a consequence of tax relief, the gross salary package actually paid to an ICT worker is less than the appropriate rate which would be paid to a resident worker doing the same job, the employer would have to make up the difference in order for the worker to qualify for admission.
Where part of the salary package is given as an accommodation allowance in kind, the sponsoring employer must provide independent evidence of the value of that accommodation.
In my previous reply, I mentioned the need to adhere to our international trade commitments. The Government strongly supports ambitious Free Trade Agreements (FTAs), which bring considerable benefits to UK businesses.
The temporary movement of skilled professionals (known as Mode 4) is an integral part of FTAs. The commitments made are largely reciprocal and they enable UK businesses to win contracts and transfer key personnel to their establishments abroad. At the same time, we take commitments which enable foreign-based companies to send workers to the UK where the presence of those workers is needed in connection with the supply of a service to a UK client.
These commitments do not allow the UK to apply an economic needs test, in other words to link transfers to national skills shortages, but nor do they prevent us from regulating the admission of such workers in other ways. For example, we can impose requirements concerning their levels of qualifications and remuneration, to ensure that transferees are skilled and are not being used to undercut resident workers.
The European Union (EU) India FTA is expected to have considerable benefits to UK businesses trading with India, in the region of hundreds of millions of pounds per year. The EU’s offer to India on the temporary movement of skilled professionals has not been finalised, nor has the UK’s contribution to the EU offer. We will ensure that any commitments placed on the UK by this agreement will be consistent with our commitment to reduce net migration to sustainable levels.
To pick up on a couple of other points raised by your readers, the Government is currently consulting on breaking the link between working temporarily in the UK and settling here. The consultation is open until 9 September and your readers can respond via the UK Border Agency website. In addition to the proposals set out in the consultation, we have already introduced a new income requirement for settlement applications, as well as a criminality test which requires all migrants (except refugees) to be free of unspent criminal convictions in order to settle.
We are also introducing major reforms to the student route, including new restrictions on students’ permission to work. These reforms are designed to ensure that every student who comes to the UK is genuinely coming here to study, not to work or with a view to settling here.
Damian Green MP