After the last few years where there have been plenty of changes to report in the Global Mobility space, this years' Budget has been relatively benign.
We have picked out some highlights worthy of note below.
The Budget 2026 : Global Mobility
Overview
Immigration Skills Charge and Certificate of Sponsorship Fees
As a general principle, where an employer meets a cost that is properly the employee's obligation, it constitutes a benefit that is taxable either as earnings or as a benefit in kind (BIK), which is reported through PAYE or on a P11D.
When sponsoring overseas workers, employers must pay the Certificate of Sponsorship fee (CoS) and the Immigration Skills Charge (ISC), which, are employer obligations, and cannot lawfully be passed to employees. Despite this, HMRC has sometimes taken the position that both can constitute taxable benefits in kind on the basis that they are intrinsic to enabling the employee to work in the UK – even though no employee obligation is being met.
To resolve this tension, it was announced in the Budget that legislation in the Finance Bill 2026–27 will provide a statutory exemption confirming that employer payments of the CoS and ISC are not taxable benefits in kind, with effect from 28 October 2026.
This removes the need to gross up these costs, include them in a PAYE Settlement Agreement or report them on a P11D. For employers sponsoring overseas workers at scale, this may provide a meaningful saving in compliance costs and administrative complexity.
Overseas Scale Rates and Business Travel Expenses
The Government has announced a welcome overhaul of the Overseas Scale Rates (OSR) and Benchmark Scale Rates (BSR), which are used by employers to reimburse their employees for domestic and overseas travel and subsistence expenses, without the need to check receipts.
BSR will be modernised to better reflect current subsistence costs, with the current OSR (which covers more than 200 destination-specific rates set in local currencies and up to ten separate subsistence categories per location) being replaced by a simple three-tier structure linked to journey duration: under this, the new rates will be:
- £20 for periods of travel over five hours,
- £60 for over ten hours, and
- £75 for over 24 hours.
The change takes effect from 6 April 2028, with secondary legislation to follow, and HMRC has confirmed it will continue to engage with stakeholders to finalise how the tiers will map to individual destinations before the new framework and guidance are published.
While the simplification will eliminate the need to track destination-specific rates in multiple currencies, employers with high volumes of international travellers to expensive locations should consider whether the new flat rates adequately cover actual costs, or whether bespoke rate arrangements or actual expense reimbursement with receipts may be better suited.
Changes to the existing Payments on Account system for Income Tax Self-Assessment
The Government has announced its intention to 'modernise' the Payments on Account system for Income Tax Self-Assessment (ITSA).
From April 2029, ITSA taxpayers who already make Payments on Account will be required to make smaller, more regular contributions towards their tax bill throughout the year, with the stated aim of bringing payments of tax closer to when the income to which they relate is earned.
Whilst the Payments on Account system typically applies to self-employed individuals, including consultants, or members of LLPs, it is also of relevance in a Global Mobility context for UK employees who are employed by a foreign employer. If the overseas employer does not have a presence in the UK requiring it to operate PAYE, then the UK employee must declare and pay income tax on their employment income under ITSA instead.
For more analysis of this measure, see our commentary: Private Capital.
