British Prime Minister Keir Starmer on Wednesday dismissed the idea that he had sold out British workers by giving a tax break to some Indian workers as part of a free trade agreement with India, calling the claims “incoherent nonsense”.
The trade deal announced on Tuesday, which includes a range of tariff cuts on British imports to India, also exempts some short-term workers from India from paying into Britain’s social security system for three years.
The exemption under the so-called Double Contributions Convention (DCC) also applies to British workers in India, but while Britain barely made mention of this element of the trade deal, India hailed it as a “huge win”.
British opposition parties accused the government of signing up to a deal that would unfairly benefit India.
“Our India trade deal … is good for British jobs. The criticism on the double taxation is incoherent nonsense,” Starmer told parliament. “It’s in the agreements that we’ve already got with 50 other countries.”
Britain has social security agreements with the European Union and countries including Switzerland, Canada, Japan and Chile, with some deals allowing for five-year exemptions, which ensure migrant workers are not taxed in two countries at one time. India also has similar agreements with other nations.
Revenue engine
Britain expects the DCC agreement with India to cost around 100 million pounds ($133 million) a year.
Story continues below this ad
Social security, known as National Insurance in Britain, is the country’s second-biggest tax, which raises over 170 billion pounds in government revenue through employee and employer contributions.
Earlier, Britain’s Trade Minister Jonathan Reynolds said that the changes would affect only a “very small number” of people.
Nigel Farage, the leader of Reform UK, which is currently leading in the opinion polls, said the government had “sold out British workers”.
He said that Indian workers and firms would pay 20 per cent less tax than their British counterparts.
Indian officials have said the social security exemptions would benefit Indian information technology companies operating in Britain, which often transfer employees to the country on short-term contracts.
Story continues below this ad
Official data shows Britain granted more than 81,000 work visas to Indians last year, more than any other nationality, although many represent health and care or other non-temporary workers who would still be expected to pay social security in Britain.