UK-India trade deal: Is Farage right to call out 'big tax exemption'?
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.
Politicians of all stripes have leapt to judgement.
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."
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.
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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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Indian workers and businesses will still have to pay the equivalent tax in India, as well as sponsorship fees and the NHS surcharge.
Crucially, the deal only applies to workers being sent over by Indian companies on a temporary basis.
Those workers are on Indian payroll. It does not apply to Indian workers more generally. That means businesses in the UK can't (and won't) suddenly be replacing all their workers with Indians.
The conditions for a company to send over a secondee on a work visa are restrictive. It means it's unlikely that these workers will be replacing British workers.
However, It does mean that the exchequer will not capture the extra national insurance tax from those who come over on this route.
The government has not shared its impact assessment for how many extra Indians they expect to come over on this route, how much NI they will escape, or how much this will be offset by extra income tax from those Indians. The net financial position is therefore murky.
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