Job Discussion Forums

[gmjones]

Hi, I am very confused about paying taxes in the UK on earnings I have made there during summer holidays. Perhaps if any Brits read this and have experience they can advise me.

During the last two academic years I have been working in Spain and before that in South America. Because I have been out of the country (UK) for the majority of the tax year and have never earned more than my tax free allowance (corresponding to my tax code) I have always been entitled to a tax rebate on the summer work I did, following completion of the inland revenue forms.

Last summer however I was in England for 3 months and did 2 months temping and a four week summer school. I earned a tidy sum, but under my tax allowance. When I was paid I was charged a horrific amount of tax and on my payslip saw I had been charged an emergency tax code. I called to see what had happened and to begin applying for a tax rebate and was told that I am now suddenly not entitled to one, that as I am working abroad Iam subject to a world wide tax and that i was over taxed to compensate for the lower rates which I pay in Spain. A friend called on my behalf and was told the same thing.

Now what I am wondering is if anyone has been in my position and can explain to me if they are right to tell me this... I work with several Brits, who even work with me in the summer and say that they are never charged tax... Additionally it seems strange to me that they claim to be calculating a world wide tax on my salary but indeed the tax code appointed on my paylsips was only an emergency tax code...

I hope I have explained this situation clearly, and of anyone can give me any advice I'd love to hear form them...

Gabrielle

[guty]

Im guessing here, but I think when you apply for the rebate you sign a declaration that you will not be earning again in the UK in that tax year. In effect you are saying that you are a non-uk resident for tax purposes.
This then leads them to tax you as a non citizen, and you may even forfit your tax free allowance as that is only for residents., which is why you were given an emergency tax code.

There are 2 certainties in life .......

[gmjones]

I hear what you are saying... the thing is that Ive been doing this every year since i started teaching 6 years ago, and I have completed the entry and exit form as required by the inlnd revenue and always said that it is my only job in the tax year... this however is the first time this has happened and that Ive been given the world wide tax story... I always say its my only job becusae it likely is and because I always want to apply for my tax back asap... Its a bit rotten really becasue I feel like I shouldnt go back to work in the summer because my own tax system is ripping me off!!

Thanks for your comments tho guty

[guty]

[Stephen Jones]

The particular form you need is IR 20
http://www.hmrc.gov.uk/pdfs/ir20.htm#coming

What may well have happened is that you have been spending more than an average of 91 days a year in the UK (quite possible if you come over for Christmas as well as summer breaks of two to three months). After the fourth year you qualify as resident in the UK for tax purposes for the fifth year.

Short term visitors

Residence
3.3 You will be treated as resident for a tax year if

* you are in the UK for 183 days or more in the tax year (see paragraph 1.2), or
* you visit the UK regularly and after four tax years your visits during those years average 91 days or more a tax year - see paragraph 3.6. You are treated as resident from the fifth year. However

- any days spent in the UK for exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not counted for this purpose
- you are treated as resident from 6 April of the first year, if it is clear when you first come to the UK that you intend making such visits and you actually carry out your intention
- you are treated as resident from 6 April of the tax year in which you decide that you will make such visits, where this decision is made before the start of the fifth tax year and you actually carry out your decision.

For example

* you come to the UK with no definite intentions, but your visits during the tax years 1999-2000 to 2002-2003 average at least 91 days a tax year; you are resident from 6 April 2003
* you first come to the UK during 1999-2000, intending that between then and 5 April 2003 your visits will average at least 91 days a tax year; you are resident from 6 April 1999, provided that your visits in fact reach that level
* you first come to the UK during 1999-2000 with no definite intentions and you spend, say, 60 days here; you come again during 2000-2001 and decide you will come regularly in future years and your visits will average at least 91 days a tax year; you are resident from 6 April 2000, provided that your visits in fact reach that level.

Ordinary residence
3.4 You will be treated as ordinarily resident if you come to the UK regularly and your visits average 91 days or more a tax year - see paragraph 3.6. Any days spent in the UK for exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.

3.5 The date from which you are treated as ordinarily resident depends upon your intentions and whether you actually carry them out. You will be ordinarily resident

* from 6 April of the tax year of your first arrival, if it is clear when you first come here that you intend visiting the UK regularly for at least four tax years
* from 6 April of the fifth tax year after you have visited the UK over four years, if you originally came with no definite plans about the number of years you will visit
* from 6 April of the tax year in which you decide you will be visiting the UK regularly, if that decision is made before the start of the fifth tax year.

For example

* you first come to the UK during 1999-2000, you intend visiting regularly until at least 5 April 2003 and your visits will average at least 91 days a tax year. You are ordinarily resident from 6 April 1999
* you come to the UK with no definite intentions, but you visit regularly during the tax years 1999-2000 to 2002-2003 and your visits average at least 91 days a tax year. You are ordinarily resident from 6 April 2003
* you first come to the UK during 1999-2000 with no definite intentions; you come again in 2000-2001 and 2001-2002; during 2001-2002 you decide you will come regularly in future years, and your visits will average at least 91 days a tax year. You are ordinarily resident from 6 April 2001.

Calculating annual average visits

3.6 Where it is necessary to calculate your annual average visits, the method is as follows:
Total visits to the UK (in days)
x 365 = annual average visits
Relevant tax years (in days)

For example, suppose you visited the UK for 80 days in 1995-96, 100 days in 1996-97, 85 days in 1997-98 and 105 days in 1998-99. The annual average is
80+100+85+105
x 365 = 92.44 days
366+365+365+365