Get all your news in one place.

100’s of premium titles.
One app.

Start reading

Get all your news in one place.

100’s of premium titles. One news app.

Start reading

Evening Standard

Politics

Nuray Bulbul

What is double taxation? UK-India trade deal controversy explained

United Kingdom India Sir Keir Starmer NI (Organization) Jonathan Reynolds Kemi Badenoch Britain Economy Visa

Sir Keir Starmer has been accused of enacting a “two-tier tax” system after it was revealed that some Indian workers would not be required to pay National Insurance (NI),

Indian workers travelling to Britain and UK nationals going to India will not have to pay NI contributions in both countries for the first three years as part of the Prime Minister's historic trade agreement with Narendra Modi.

It means people working on short-term visas will only make social security payments from their wages in their home country when working abroad.

Delhi hailed the three-year exemption as a "huge win" that will "make Indian service providers significantly more competitive in the UK" in a press release.

According to ministers, the long-awaited deal will drastically lower taxes on British exports, including cars, scotch whisky, and other goods, and boost the economy by £4.8 billion year by 2040.

But Tory leader and former Business and Trade Secretary Kemi Badenoch stated: “This is two-tier taxes from two-tier Keir.

“I refused to sign this deal because: Tax refunds for Indians not available to us Visa requests too high Ceramics and Aluminium industries would be screwed... When Labour negotiates Britain loses.”

This is two-tier taxes from two-tier Keir.
I refused to sign this deal because:

1️⃣ Tax refunds for Indians not available to us

2️⃣ Visa requests too high

3️⃣ Ceramics and Aluminium industries would be screwed.

Andrew is 100% correct.
When Labour negotiates Britain loses. https://t.co/TiC3gOc21o
— Kemi Badenoch (@KemiBadenoch) May 6, 2025

Reform UK leader Nigel Farage said: “This Government doesn't give a damn about working people. The Labour Party has this time in a big, big way betrayed working Britain.”

However, Business Secretary Jonathan Reynolds defended the deal saying there was "no situation" in which he would "ever tolerate" British workers being undercut.

The agreement was concluded following three years of post-Brexit negotiations, although it is still not known how many Indians and businesses will profit from it.

But what is double taxation and how will the deal work?

What is double taxation?

Double taxation is when you’re taxed on your UK income by the country where you’re a resident in, and by the UK.

If your home country has a "double-taxation agreement" with the UK, you may not be required to pay twice.

Depending on the agreement, you can apply for either partial or full relief before you’ve been taxed or a refund after you’ve been taxed.

The country you pay taxes in, the country you ask for relief in, and the amount of tax relief you receive are all specified in each double-taxation agreement. You will pay the greater tax rate if the tax rates in the two nations differ.

Different countries may have different dates for the start of the tax year.

How will the tax deal with India work?

According to Mr Reynolds, the agreement would be applicable to inter-company transfers between the UK and India, guaranteeing that employees who are transferred to and from either nation do not make payments into both social security systems at the same time.

When short term Indian workers arrive in Britain, they will pay into their system rather than the UK's, and British workers who relocate to India will continue to pay into the UK system.