India-UK Social Security pact back on the table and possibly a free trade deal. The two countries represent met on August 6, 2020 to continue talks on the “enhanced trade partnership”. Their discussion today focused on the two parts of the partnership. The India-UK trade partnership discussed today were immigration reforms and Social Security pact. Specifically, India wishes the UK to not charge Social Security tax to nonpermanent Indian residence. In other words, Indian workers specifically tech workers in the UK on contract won’t pay the UK Social Security tax. India would benefit greatly from changes on exported workers paying Social Security in the UK.
Explanation
An India-UK Social Security pact would radically alter how Social Security works for assigned Indian workers in the UK. As it stands now a worker on assignment from a company in India has to pay both UK and Indian SST. Specifically, all residents of the UK including assigned workers have to pay Social Security. To be fair, the UK Social Security tax is what allows the countries free healthcare, education, and other benefits. However, in order to access many of these benefits an individual has to pay into Social Security for 10 years. Most Indian workers on temporary the assignment to UK are there on visas that typically last five years. As a result, these workers don’t get to use the benefits and cannot be reimbursed what they paid.
Additionally, the workers company is still paying Social Security to India while their employee is in UK. The proposed India-UK Social Security pact seeks to correct this issue by exporting the SSP and benefits of both countries. Specifically, Indian workers on assignments in the UK would be covered by the Social Security plan of India. The reverse also be true for any UK citizen on temporary employment in India. This would save companies from both countries estimated combined $327850000.00 US in extra Social Security taxes. While the UK has entered into similar Social Security pacts the proposed India-UK is the first with proposed benefits. However, it is difficult to see a downside for either country in going forward with the proposed Social Security pact.
