SiSiSi Posted June 23, 2011 Share Posted June 23, 2011 If you have a job abroad and the salary is tax free (in that country) do you still have to pay UK income tax? Please only reply if you actually know the answer. Thanks. Link to comment Share on other sites More sharing options...
Cyclone Posted June 23, 2011 Share Posted June 23, 2011 It depends on where you are actually resident, which will largely depend on how long the job is for and whether you make regular trips back here. Be aware that if you declare yourself non resident in order to not pay income tax here, then you'll also not be making any NI contribution which might affect any claim you make in the future which is contribution based. Link to comment Share on other sites More sharing options...
SiSiSi Posted June 23, 2011 Author Share Posted June 23, 2011 The job is in the middle east for two years with a vacation return to the UK in the summer. I intend to keep my house/mortgage here. Link to comment Share on other sites More sharing options...
Tim James Posted June 23, 2011 Share Posted June 23, 2011 You'll be liable for tax somewhere, would depend on your contract of work Link to comment Share on other sites More sharing options...
alternageek Posted June 23, 2011 Share Posted June 23, 2011 Yeah, I believe for the UK you advise HMRC that youve left for the tax year. Youll have to pay taxes locally where you are working. Upon return, youll have to notify HMRC that youre back. http://www.hmrc.gov.uk/incometax/tax-leave-uk.htm#2 Income from overseas employment If you become non-resident, you won't pay UK tax on your income from working overseas. Working partly in UK If you're non-resident but work partly in the UK, you'll pay UK tax on the part of your earnings allocated to that work. You usually allocate your earnings by looking at the number of days you work in the UK and the number of days you work abroad. Special rules for certain employees There are special rules for: Crown employees seafarers oil and gas workers entertainers and sports people students Special rules for Crown employees Contact HMRC & http://www.hmrc.gov.uk/incometax/tax-leave-uk.htm#1a Contacting HM Revenue & Customs when you leave the UK If you have left or are about to leave the UK you must tell HM Revenue & Customs (HMRC). If you're not required to fill in a tax return, you'll have to complete form P85 Leaving the UK - getting your tax right. HMRC will use the information on the form to send you any tax refund you're owed and work out if you'll become non-resident. It's important you enclose parts 2 and 3 of form P45 if you have one as HMRC will not be able to make any tax refund due without them. You'll need to send the original versions - photocopies won't be accepted. If you're leaving the UK to work full-time abroad for a UK based employer for at least a complete tax year, you'll need to fill in a tax return as well as a form P85. Go to form P85 Do you need to complete a tax return? Link to comment Share on other sites More sharing options...
Arguendo Posted June 23, 2011 Share Posted June 23, 2011 Don't forget if you’re going to work abroad, to submit a tax review, to claim any tax you are owed. Both me & the wife worked in Australia, we left in August, submitted a tax claim because we had only been working for part of the year & got quite a lot back. And in answer to original question, quite few of our colleagues who have worked in the middle east didn’t pay any tax either in the country they were working or back in the UK. Link to comment Share on other sites More sharing options...
Bulgarian Posted June 23, 2011 Share Posted June 23, 2011 The job is in the middle east for two years with a vacation return to the UK in the summer. I intend to keep my house/mortgage here. Not sure the bank will be happy with you having a mortgage then officially not being a UK resident. Link to comment Share on other sites More sharing options...
Cyclone Posted June 23, 2011 Share Posted June 23, 2011 The bank won't care as long as you keep paying the mortgage. If you don't register to pay tax in the country you will be resident in then HMRC could be funny about it if they found out, but if the local tax regime where you work is that there is no income tax then that's fine. Link to comment Share on other sites More sharing options...
Bulgarian Posted June 23, 2011 Share Posted June 23, 2011 I'm sure my mortgage said I had to be a UK resident, but if they don't find out they won't know. Link to comment Share on other sites More sharing options...
Eater Sundae Posted June 23, 2011 Share Posted June 23, 2011 EDIT. I've now seen the HMRC website. What I've written below is clearly waaaaay out of date. I've not done anything like this for over 15 years, so the rules may have changed. When I did it there was something called the "one-sixth rule", IIRC. In effect, you could return to the UK for up to one sixth of the year, ie approx 2 months. Any longer than that and UK income tax would kick in. (You had to be based abroad for nominally a year or more to even be eligible for "non-domiciled for tax purposes", as I think the terminology is. However, it's not just 2 months in any year. What it means (I THINK - you should try and get some separate confirmation) is that any period in the UK must be surrounded by longer periods either side outside the UK, to meet the one sixth rule for that period. A couple of scenarios. 1st scenario. Period A outside the UK - 20 weeks Period B back in the UK on leave or work - 2 weeks Period C outside the UK - 16 weeks Period D back in UK - 4 weeks Period E outside UK - 10 weeks Total period, 52 weeks = year. Total allowed by one sixth rule =8.66 weeks. Total in UK, 6 weeks. Therefore OK over the whole year. ist period out-in-out: 20-2-16 (2 in the UK out of a total of 38, therefore OK on one sixth rule). 2nd period out-in-out: 16-4-10 (4 in the UK out of a total of 30 therefore OK for one sixth rule). Therefore a total of 6 weeks back in the UK, and no UK tax to pay. 2nd scenario. Period A outside the UK - 40 weeks Period B back in the UK on leave or work - 2 weeks Period C outside the UK - 4 weeks Period D back in UK - 2 weeks Period E outside UK - 4 weeks Total period, 52 weeks = year. Total allowed by one sixth rule =8.66 weeks. Total in UK, 4 weeks. Therefore OK over the whole year. ist period out-in-out: 40-2-4 (2 in the UK out of a total of 46, therefore OK on one sixth rule). 2nd period out-in-out: 4-2-4 (2 in the UK out of a total of 10. For a total of 10 weeks, the one sixth rule would limit you to 1.66 weeks in the UK. Therefore you would exceed the one sixth rule and be subject to UK tax for the whole year. Therefore only 4 weeks back in the UK, but subject to UK tax for the whole year. This problem would probably not occur in your case where there is just one visit back home, mid term, as you would have the best part of a year outside the UK both before and after, but I thought it worth mentioning in case the returns to the UK were more flexible. Disclaimers. The calculation is probably done in days per year, not weeks per year, but the principle is the same. This is how I remember it, from the early 90s. Clearly there could have been many changes to the tax system since. I particularly remember it because a colleague of mine went to work overseas for our employer. He had originally intended to go for a few months only. It was extended and he took some leave back in the UK. He then returned, and was then asked to go to a different country for a few more months. He spent a few days back in the UK, before his transfer. As a result, he finished working out of the UK for over one year, and so could have claimed his income tax back. However, his second visit home was similar to my scenario 2 above, and it took him over the one sixth rule. He only exceeded his allowance by a couple of days, but HMRC were very strict and clear about it. The galling thing for him was that he could just as easily have taken a few days holiday in the far east (which is where he was working at the time), but hadn't realised/understood how the system was calculated. When I did this, I was working for a UK based company, and transferred to an office overseas. I don't know if it is any different if you just take up employment with an overseas company. In my case I was, in effect, still working for the same company, but was just living outside the UK for a period greater than one year, and could therefore apply to be considered as "non-domicile for tax purposes". In my case, I was working in countries where there was no local income tax to pay. I think (but I may be wrong, so check with HMRC) that if you have to pay tax in the country you are working, then you may not need to pay it back in the UK. This may over-ride the one sixth rule. It never applied to me, so I'm not sure how it works. There would be something particularly perverse if you had to pay income tax in two countries. In my case, the UK accepted that I was paying the required tax in the country I was working. It was just that the required tax was zero. I would suggest you actually contact HMRC. I have found them quite helpful when I have spoken to them on these sort of matters. Good luck. I hope you enjoy the experience. Link to comment Share on other sites More sharing options...
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