Aid workers hit by expat tax changes

AID organisations are having to find extra cash to compensate field workers whose salaries are no longer tax-free.

The Government's decision to abolish the foreign-earnings deduction affects hundreds of people working for charities abroad. Their salaries are already much lower than those in the commercial sector. Now, charities say, they will have to pick up the tax bill too.

Oxfam says the new rules affect only five of its employees at present, but that number could increase at any time. So far it is costing the charity pounds 20,000 that could be used for other projects. For instance, it is running a pounds 20,000 programme in western Sudan helping 10,000 farming families by teaching them more effective techniques for collecting rain and harvesting.

Olive Gearing, a spokeswoman for Oxfam, said: "Before the rules changed we would pay people's salaries, less the value of the tax they would have paid. This meant that they ended up with the same salary as if they had paid tax. We did not have to spend so much on salaries and could devote more money to our work.

"Now we have to increase the salaries to allow for the tax they must pay, and that money has to come out of the budget that is set aside for our relief programmes."

When Denis Healey, the then chancellor, introduced the deduction measure in 1977, he hoped to encourage talented Britons to take up opportunities abroad without becoming tax exiles. They would remain domiciled here, spend money here and remain British. There was a logic, too, in not charging people tax for services they were not using.

Under those rules, if a person went abroad for 365 days or more, and provided they did not return to the UK too often during that time, they were not taxed. Now the rules revolve around the tax year which started on 6 April.

This means that Samantha Wakefield, who left to work for Oxfam in Khartoum in February and will return next February, will not have been abroad for a full tax year and must therefore pay tax.

Ms Wakefield, 31, who is working as regional human resources manager, said she was angry about the new policy. "I do think it is unfair that organisations like us are affected and have to pay out so much money to cover the tax. It does not make any difference to my final salary, but the regional budget has been cut to take into account the fact that I must now pay tax.

"I feel quite angry with the Government for doing this. We do not have that much money and it is already hard to get funding. We do so much with so little money and pounds 20,000 is a lot of money for Oxfam.

"People will still have to be sent out to situations and Oxfam will just have to pick up the bill. We can't wait until the start of the tax year."

Nick Kavanagh, vice-chairman of the Charities Tax Reform Group and finance co-ordinator of Save the Children, said the new rules were very worrying. "As long as you have been away for a full tax year then you can still be paid gross, but you can have the ludicrous position of someone who leaves on 1 May 1998 and returns on 31 March 2000: they have been away for nearly two years but they will still have to pay tax because they have only been away for 11 months of each tax year."

Save the Children could have between 30 and 60 people on short-term contracts at any one time who would be affected by the new rules, he said.

"The cost of dealing with this will fall back on the charity, but we cannot say how much that will be at this stage because it depends on how we can work around the new rules. If we refuse to do anything about what we pay people that would put them off wanting to do the work, so we will have to do something.

"It is an extra cost to us - both in making up the salaries to allow for the tax they will have to pay, and in administration."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
A still from a scene cut from The Interview showing North Korean leader Kim Jong-un's death.
tech
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
Arts and Entertainment
Bianca Miller and Katie Bulmer-Cooke are scrutinised by Lord Sugar's aide Nick Hewer on The Apprentice final
tvBut Bianca Miller has taken on board his comments over pricing
News
in picturesWounded and mangy husky puppy rescued from dump
News
newsAstonishing moment a kangaroo takes down a drone
Life and Style
Duchess of Cambridge standswith officials outside of the former wartime spy centre in Bletchley Park
tech
News
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

The Jenrick Group: Maintenance Planner

£28000 - £32000 per annum + pension + holidays: The Jenrick Group: Maintenance...

The Jenrick Group: World Wide PLC Service Engineer

£30000 - £38000 per annum + pesion + holidays: The Jenrick Group: World Wide S...

The Jenrick Group: Project Manager

£35000 per annum + Pension+Bupa: The Jenrick Group: We are recruiting for an e...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'