UK policymakers urged to establish framework for cross-border remote working amid surging demand

Cross-border remote working has risen sharply since the pandemic with three quarters of UK businesses (75%) surveyed now considering it a medium-to-high priority to attract and retain talent, according to a new report by the City of London Corporation and EY.

The report reveals that cross-border remote working is being fuelled by acute skills shortages globally and rising demand for increased flexibility, as well as a perception from firms that it is a transformational tool that can deliver benefits for their workforce.

A poll of 151 respondents across the financial and professional services industry found that the biggest challenges and risks facing firms that might allow cross-border remote working relate to higher tax costs and additional filing and reporting requirements (50%), restrictive immigration policies (16%) and cross-border regulatory oversight and barriers (18%).

An additional area for consideration is whether local market professional qualifications are recognised across borders.

The report finds coherent global regulation for cross-border remote working is largely non-existent. It recommends that the UK should be exploring how to lead innovation, shape multilateral dialogue and ensure international competitiveness as these new working models become increasingly mainstream.

A majority (96%) of the businesses polled believe the UK government should take action to support employers in meeting cross-border remote working demand. The recommendation is to make unilateral changes to UK rules to enable inbound cross-border remote working as well as multilateral and bilateral changes to the UK’s key trading partners.

Policy Chairman of the City of London Corporation, Chris Hayward, said:

“Cross-border remote working is rapidly rising up the business agenda. This trend poses both challenges and opportunities for the UK financial sector.

“On the one hand, we want firms to be able to offer the flexibility that globally mobile talent demands. On the other, we need to retain the benefits of financial and professional services sectors clustering in one place.

“Above all else our findings shows that to keep the UK competitive and a global leader in financial services, we need an immigration system that encourages highly skilled people and high growth businesses to choose to locate and invest in the UK. This will complement investment in domestic skills.

“We need to seize the opportunity for the UK to shape the development of cross-border remote working frameworks as demand from workers and firms continues to increase.”

 Seema Farazi, lead author of the report, and UK Financial Services Immigration Partner at EY, said:

“The future of work is here now, and we must innovate to ensure the UK remains at the fore of workplace advancements. How and where people work and what they will compromise on has been irreversibly altered since the pandemic, and firms need to be empowered to so they can respond to employee demand for greater flexibility. The risk of doing nothing is potentially significant and could lead to a reduction of the UK’s competitiveness on the international stage when it comes to attracting and retaining top global financial talent.”

Ahead of the Spring 2023 UK Government review into cross-border remote working, today’s report outlines key recommendations that would enhance UK competitiveness and attractiveness to talent. These include:

  • Steering policy makers towards the adoption of common standards across cross-border remote working, by leveraging the impending findings of the government’s Review on Hybrid and Distance Working being conducted by the Office of Tax Simplification.
  • Introducing reforms across immigration and tax to drive policy innovation and to enhance the UK’s global position both amongst competitors and in terms of attractiveness to talent. This could include reform to business visitor rules to include cross-border remote working as a permitted business visitor activity.
  • Leading relevant dialogue and negotiating reciprocal provisions with trading partners to enable UK employers to facilitate outbound cross-border remote working with greater transparency and reduced administrative burden.