Discussion
My son is working in Japan for a year from August 2005 to July 2006, and much to my surprise has actually thought about his tax liability on return. Not sure if he has been saving it, but he has thought about it.
The Japanese are not deducting tax as it is a fixed 11 month contract arranged through the UK govt. I am presuming that when he returns in July 2006 they will want their tax at UK rates from August 2004-April 5th 2006 (he didn't earn April-July 2005), and then the tax on the money earned April 6th onwards. He is going on to post grad education on return so won't be earning through to April 2007.
I am going to do the calculations for him on the IR CD Rom as to how much he needs to have saved from his £18,500 PA salary.
Does anybody know when they will want their money? Will they try and get the money he owes for April 2006-July 2006 through his tax code or want a lump sum (then or the following Jan/April)?
He has been paying some kind of employees insurance in Japan (hard to translate he tells me). Will the UK tax man expect NI as well? Please say NO!
First of all, a person who is non-resident in the UK for the whole of the tax year is usually exempted completely from UK tax. Your son is out of the UK from August 2005 to July 2006 - this means in tax year 2005/06 he has been out of the UK for only 248 days. It seems to me that he is still resident in the UK for 2005/06 and will be subject to UK taxes. Normally, he would have suffered Japanese tax and would have been able to offest that Japanese tax against his UK tax liability - only having to pay any extra UK taxes due. However, it seems that he has suffered no Japanese taxes whatsover so my assumption would be that he is liable to UK tax on the full amount earned up to 5 April 2006.
The best thing for him to do is ask for a 2005/06 Self Assessment tax return - complete this and calculate the tax due. 2005/06 tax returns will not be available from the Revenue until after 6 April 2006. The tax would be payable by 31 January 2007.
As the income was not derived from a UK employemnt, I would not think that it would be subject to UK National Insurance contributions.
He will also have some Japanese income from 6 April 2006 to 31 July 2006 and the same procedure will need to be carried out for the tax year 2006/07. He could have a much higher liability on this second tax year because he may also have a UK salary in that year by then.
The best thing for him to do is ask for a 2005/06 Self Assessment tax return - complete this and calculate the tax due. 2005/06 tax returns will not be available from the Revenue until after 6 April 2006. The tax would be payable by 31 January 2007.
As the income was not derived from a UK employemnt, I would not think that it would be subject to UK National Insurance contributions.
He will also have some Japanese income from 6 April 2006 to 31 July 2006 and the same procedure will need to be carried out for the tax year 2006/07. He could have a much higher liability on this second tax year because he may also have a UK salary in that year by then.
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