UK-India Deal: Indians Working Temporarily in the UK Now Exempt from Paying Social Security Contributions for Three Years
UK-India Agreement Shifts Single-Handed Salary Contributions for Indian Workers
Get ready for some big news, folks! India and the UK have finally signed a deal that's going to put a smile on the faces of many Indian workers in the UK.
The deal in question is the much-anticipated Double Contribution Convention (DCC) that forms part of the Free Trade Agreement (FTA) between the two countries. Here's the scoop on this game-changer:
- Savings Period: Under the DCC, Indian workers temporarily based in the UK and their employers can breathe a sigh of relief. For up to three years, they'll no longer be compelled to contribute to the National Insurance (NI) social security scheme in the UK. Instead, they'll only pay social security contributions in India, their home country[1][3][4].
- Impact: This exemption is expected to benefit more than 60,000 Indian employees, primarily from the IT sector, and Indian companies operating in the UK. By avoiding double contributions, these workers can expect savings of around 20% of their salaries, and Indian firms could reap competitiveness benefits worth approximately Rs 4,000 crore[1][4].
- Rationale: Previously, Indian professionals working on temporary UK visas had to pay contributions to both the UK's National Insurance and social security contributions in India. Since they couldn't claim benefits from the UK's system upon returning to India, this double contribution imposed a hefty annual cost of around £500 per worker, which added to the burden of taxes and immigration health surcharges[1][5].
- Agreement Basics: The DCC ensures that employees temporarily working in the other country (UK or India) for up to three years pay social security contributions only in their home country, maintaining the continuity of their social security record without duplication. It follows similar principles as UK social security agreements with countries like the EU, Switzerland, Canada, Japan, and South Korea[2].
- Exceptions: It's important to note that the DCC does not affect the rights of individuals to access social security benefits from the country where they pay contributions, nor does it change requirements such as the UK immigration health surcharge[2].
So, what does all this mean for you? Well, if you're an Indian employee on a temporary stint in the UK, you can now focus on your work without worrying about double contributions for the next three years. This not only saves you cash but also makes you more competitive in the UK job market.
Sources:[1] The Economic Times[2] The Indian Express[3] India Today[4] The Hindu BusinessLine[5] The Financial Express
- The recently agreed Double Contribution Convention (DCC) between India and the UK, a part of the Free Trade Agreement (FTA), is sending a wave of relief to the Indian business and finance sector, particularly the IT sector.
- Under this DCC, it is unlikely that Indian workers temporarily residing in the UK would have to finance double social security contributions for the next three years, thus avoiding an annual cost of around £500 per worker.
- The pension benefits of Indian employees working temporarily in the UK could see a significant improvement due to the savings, with estimates suggesting a potential reduction of up to 20% of their salaries.
- This limited period exemption from National Insurance (NI) social security contributions, as a result of the DCC, is a significant step in the general-news landscape of UK-India collaboration, following the agreements with countries like the EU, Switzerland, Canada, Japan, and South Korea.
- However, it's crucial to understand that the DCC does not alter mandates regarding the UK immigration health surcharge or an individual's right to claim social security benefits from the country where contributions are made.
