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Britain’s trade deal with India has created a pocket of controversy on taxation.
Under the agreement, Indian workers who have been seconded to Britain temporarily will not have to pay National Insurance (NI) contributions in the UK. Instead, they will continue to pay the Indian exchequer.
The same applies to British workers in India. It avoids workers from being taxed twice for a full suite of benefits they will not receive, such as the state pension.
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Politicians of all stripes have leapt to judgment.
Nigel Farage has described it as a “big tax exemption” for Indian workers. He said it was “impossible to say how many will come,” with the Reform Party warning of “more mass immigration, more pressure on the NHS, more pressure on housing”.
But, is this deal really undercutting British workers, or is it simply creating a level playing field?
Be wary of any hasty conclusions. In the absence of an impact assessment from the government, it is difficult to be precise about any of this. However, at first glance, it is unlikely that some of Reform’s worst fears will play out.
Firstly, avoiding double taxation is not the same thing as a “tax break”. This type of agreement, known as a double contribution convention, is not new.
Britain has similar arrangements with other countries and blocs, including the US, EU, Canada, and Japan.
It’s based on the principle that workers shouldn’t be paying twice for social security taxes that they will not benefit from.
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