Job Discussion Forums

[scot47]

I understand that if you are in the UK for 90 days or more in any tax year, you may be liable to income tax on your global income. I know people working in the Middle East who are very careful not to exceed the 90 days a year (averaged over 4 years).

Is their paranoia well-founded ? Will the taxman be waiting for us at the airport ?

God forfend that I should be paying taxes for Brown's illegal neocolonial wars.

[markcmc]

Be careful, as the 90 days is sometimes interpreted in a flexible way - in their favour.

I'm not sure they would be waiting at the airport, but if you wanted to become a UK resident again, I'm sure they would take a keen interest in your finances.

[scot47]

And I do not want to pay for the Tory-Libdem colonial adventures either. And I do not need a new aircraft carrier thanks. Or a replacement for Trident.

As a result I will do what is required not to give these vultures any of my petrodollars.

[Dedicated]

Scot 47,

Having been misinformed and fallen foul of the UK tax department after returning from abroad, I'll give you my twopenny worth as I can recall.

The key factor when considering the taxation of foreign income is the person's residence position. If you are classed as non-UK resident, or non-domiciled, foreign income is not subject to UK income tax. If you are classed as ordinarily resident, then foreign income is subject to UK income tax (as I found out to my chagrin!).

If you are ordinarily resident or UK domiciled (ie. if you have a house) you pay UK income tax on all foreign income as well as Capital Gains Tax on all foreign assets.

You are classed as UK domiciled if all links with the former country of domicile (eg. Saudi Arabia) have been cut and you intend to remain in the UK permanently (ie. you claim a pension or benefits/rent a house from a Housing Association).

British residents with off-shore bank accounts had until 4th January 2010 to declare them or face investigation by HM Revenue and Customs, because of the New Disclosure Opportunity. Banks in Switzerland, Luxembourg all reveal details to the UK Tax Dept.You have to repay all tax owed + 10% penalty. If you don't declare, you can lose the lot !
If you have worked abroad for a long time, the Tax Dept is immediately suspicious if you appear to return penniless, and will delve deeply.

You have to fill in a tax declaration every year or pay �100 fine.

I'm not a tax expert, but do check it all out very carefully.

[markcmc]

[Dedicated]

Markcmc,

No, if you already pay tax through PAYE in the UK you probably won't need to complete a tax form. The tax dept already know what tax you are paying !

You must complete a tax return if you have any foreign income that's liable to UK tax (ie. if you are ordinarily resident in the UK, but go to work for a year in China).

You need to complete a tax return if you are:
* not resident
* not ordinarily resident
* not domiciled in the UK but claim remittance basis
* a dual resident of UK and another country.

Check out http://www.hmrc.gov.uk/cnr/hmrc6.pdf

[markcmc]

Your list seems to include everyone. So if I've not been resident in the UK for a long time. For example, for over 20 years, do I still need to fill in a form?

Or am I condemned to permanent exile?

[Dedicated]

Hello again Markcmc,

Going back to my post of 29th May, tax liability goes back to your residence position. If you were classed as ordinarily resident (ie. if you had a house or returned annually and intended finally returning to the UK) then foreign income is subject to UK income tax.

I'm not a tax expert, and it is hugely complicated, but it's definitely worth checking out with a tax specialist/accountant. Unfortunately for us, the UK tax dept is about the only government dept that works efficiently, and once they get their teeth into you, they just won't let go !

Good luck!

[scot47]

I think that "Dedicated" has it wrong. There are many EFLers that I know who have house, principal residence and family in the UK. They earn in the Middle East but pay no income tax because they contrive to be out of the UK for most of the year. The magic number is quoted to me as 90 days in the year (averaged over 4 years).

[Dedicated]

Well, I hope you are right, Scot47. The regulations changed from 5th April 2009. They got me (quote from letter) " ...for the year following the year of arrival, you will pay tax on the overseas income you remit to the UK in that year".

Any bank account, whether high street or offshore, is scrutinised these days because of international terrorism. I had done several very lucrative contracts in Iraq....

Perhaps a tin box under the mattress might be preferable!

[scot47]

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

My only concern is that it is too difficult for this bear of little brain. Will see a CA next month when I am on my tropical island in the Clyde Estuary.

[Dedicated]

Please get them to check the Remittance Basis Charge (1.5.20) and 2.2 very carefully. Not every accountant can do this (as I found out!).

Enjoy your tropical island - the long-range weather forecast for Arran and Bute is good.

[scot47]

Found this on another EFL-ish site :-

'An individuals liability to tax in the UK is largely dependent upon their residence status in the UK for tax purposes.

You can find information on residence and liability to tax in the UK in booklet IR20 at http://www.hmrc.gov.uk/leaflets/c9.htm and I refer you in particular to paragraph 2.2 and 5.19.

You will note that if an individual leaves the UK to work full time abroad under a contract of employment they are treated as not resident and not ordinarily resident, subsequent to their departure, if they meet ALL the following conditions:

* Their absence from the UK AND employment abroad BOTH last for at least a whole tax year (6 April to following 5 April inclusive).
* During their absence any visits to the UK
* Total less than 183 days in any tax year, AND
* Average less than 91 days a tax year

You will also note that an individual treated as not resident in the UK, has no liability to tax here on emoluments received in respect of duties of an employment performed abroad.

An individual treated as resident in the UK will however be liable to tax here on their worldwide income. They will normally be able to claim credit against their UK tax liability for any overseas tax paid, up to the amount that the UK will charge on any overseas income - Any further queries in respect of an individuals liability as a resident of the UK must be pursued with their own UK tax office.

I regret that I am unable to comment on any liability to tax outside the UK. That is a matter that must be pursued with the relevant overseas authorities.

Having said that, the UK has negotiated Double Taxation Agreements with a number of countries which contain "Professors and teachers", or other similarly named, Articles. These may prevent any liability to tax in the "other Contracting State".

You can view all the Agreements within our online Double Taxation manual at:

http://www.hmrc.gov.uk/manuals/dtmanual/DT2140+.htm

As an example you can view the Professors and teachers Article of the UK/Japan Double Taxation Agreement at:

http://www.hmrc.gov.uk/manuals/dtmanual/DT10721.htm'

[scot47]

Dedicated

I think you must have been caught out because of the short period you were out. More on the position is here. My understanding is that people in my position will NOT pay tax on earnings.

8.5 Leaving the UK to work abroad as an employee
If you are leaving the UK to work abroad full-time, you will only become
not resident and not ordinarily resident from the day after the day of
your
departure, as long as:
� you are leaving to work abroad under a contract of employment for at
least a whole tax year
� you have actually physically left the UK to begin your employment
abroad
and not, for example, to have a holiday until you begin your employment
� you will be absent from the UK for at least a whole tax year
� your visits to the UK after you have left to begin your overseas
employment will
- total less than 183 days in any tax year, and
- average less than 91 days a tax year. This average is taken over the
period of absence up to a maximum of four years � see 8.3 which will
show you how to work out this average. Any days you spend in the UK
because of exceptional circumstances beyond your control, for example
an illness which prevents you from travelling, are not normally counted
for this purpose.

[scot47]

and just taken today off the website of HMG

http://www.hmrc.gov.uk/incometax/tax-leave-uk.htm#1

Looks to me that if you stay out for long enough in a tax year, you will not be liable, regardless of owning or renting property in the UKofGB&NI.