In a major development, India and the United Kingdom have signed a new agreement providing solutions for Indian workers temporarily living in the UK by enshrining the principle of no double salary deductions. This is part of the recent agreement for a Free Trade Agreement (FTA), and Double Contribution Convention (DCC) that will reduce wages and improve financial relations between the two countries.

Exemption From UK Social Security Contributions:

Indian employees assigned to temporary work assignments in the UK were required to contribute to Indian and UK social security systems. This created a “double contribution” scenario where Indian workers already contributing 12% of their basic wages to the Employees’ Provident Fund (EPF), which is part of the Employees’ Pension Scheme, and where the employer matched this contribution. As a national legal requirement, there were also the mandatory contributions to National Insurance as social security which impacted take-home pay.

Although the new deal does provide a three-year exemption from UK social security contributions. This exemption applies to Indian workers that are temporarily posted in the UK and their employers.

Boost for Indian Companies and Tech Talent:

This change should help Indian businesses especially those in the technology and consulting industries that regularly send employees to the UK. This move will provide savings on the employer-side contributions and employee side deductions, allowing companies to direct spending more economically, and giving employees more disposable income.

How to Claim the Exemption?

In order to take advantage of the exemption, Indian employees must obtain a Certificate of Coverage before going to the UK from India’s Provident Fund office. This will prove that the person is already covered by social security in India. This is a significant improvement for Indian service providers who compete in the UK and for the future of employment opportunities while strengthening economic ties between India and the UK.