Overseas tax..again
Discussion
Both of my kids have had 12 months overseas, falling across 2 UK tax years (Usually July-June). They now visit me with their tax problems! Tax office are less than helpful.
My daughter has paid tax in Oz and after much hassle has finally got a statement of her earnings and tax paid for the year which falls across 2004/5 and 2005/6 (she was away August 2004 to July 2005). She worked in the UK April-July 2004 and since she has returned (August 2005-March 2006).
Do they calculate it all as if she was UK resident then deduct what she has paid in OZ, or write off the Oz period if she has paid what she should have done whilst over there does anyone know? By my calculations they pay more taz in OX, so if they lump it al together she may be due a bit of extra tax back , plus they have had her on emergency code.
I am no expert in this matter, and I am sure someone will be along shortly...
You need to be working out of the the country for one whole tax year become non-resident for tax purposes (and follow a few rules relating to how many days you can be back in the UK), so in these cases you (or the person who worked abroard) is liable for UK tax on all their income. I think therefore that you need to apply under the double taxation treaty that the UK have with Australia, to have the income tax/social security paid over there included (Form here) and then I believe fill in the dreaded self assessment when the time comes.
Perhaps the HRMC Centre for Non-residents could help you
You need to be working out of the the country for one whole tax year become non-resident for tax purposes (and follow a few rules relating to how many days you can be back in the UK), so in these cases you (or the person who worked abroard) is liable for UK tax on all their income. I think therefore that you need to apply under the double taxation treaty that the UK have with Australia, to have the income tax/social security paid over there included (Form here) and then I believe fill in the dreaded self assessment when the time comes.
Perhaps the HRMC Centre for Non-residents could help you
She is hoping that they wil treat it as all UK income I think because she paid income tax of about 27% in OZ. They have had her on Emergency Tax (I think they now call it basic) since she got back and have been in no rush to put it right because she didn't have a full set of payslips. She now has a letter from her Oz employer detailing what she earned and what she paid in tax (although the Oz tax year is July-June I understand).
I don't think they bother with NI, as she paid their equivilant whilist over there.
We used thge IR CD Rom yestersay and calculated that they are taking £183 a month too much at present and have been since August last year. If the OZ income is counted as UK income because shw wasn't out of the country for a full UK tax year (which seesm to be the consensus) they will owe her a bit more than that.
As a regular avoider of tax payments to the IR by courtesy of achieving non-resident status I believe the situation will be as follows :
IR will calulate the tax owed them as if they had earned the amount totally in the UK and that will be their tax liability. For the portion earned overseas they can claim a credit against their UK tax liability for taxes paid elsewhere, assuming there is reciprocal agreement in place. UK & OZ I'm pretty certain have such agreements.
If the UK tax liability on OZ earnings would have been say 5000, provided they have paid at least 5000 in OZ, they they can claim a 5000 credit against the liability. If they have paid 7000 tax in OZ there is no way to reclaim from the UK IR the difference (2000). If however they only paid 3000 in OZ then the UK IR are still owed 2000 which will have to be paid.
That's probably as clear as mud!
IR will calulate the tax owed them as if they had earned the amount totally in the UK and that will be their tax liability. For the portion earned overseas they can claim a credit against their UK tax liability for taxes paid elsewhere, assuming there is reciprocal agreement in place. UK & OZ I'm pretty certain have such agreements.
If the UK tax liability on OZ earnings would have been say 5000, provided they have paid at least 5000 in OZ, they they can claim a 5000 credit against the liability. If they have paid 7000 tax in OZ there is no way to reclaim from the UK IR the difference (2000). If however they only paid 3000 in OZ then the UK IR are still owed 2000 which will have to be paid.
That's probably as clear as mud!
No, sounds fine. She was busy planning how to spend the rebate when I left her yesterday! Mind you, the tax man had threated to tax her at 40% on what he thought she might have earned in Oz if she couldn't prove in detail that her income in Oz was lower than the UK. Nice. He may now have to eat his words and get his cheque book out.
Hi - I've been away.
They both sound to me like they are still resident in the UK for each tax year. Therefore, they are liable to UK tax on ALL their worldwide income, including income earned in Audtralia.
HOWEVER, before paying any UK tax on these foreign earnings, they will be given full credit for the Aussie tax already paid.
They probably will have no actual UK tax liability.
They both sound to me like they are still resident in the UK for each tax year. Therefore, they are liable to UK tax on ALL their worldwide income, including income earned in Audtralia.
HOWEVER, before paying any UK tax on these foreign earnings, they will be given full credit for the Aussie tax already paid.
They probably will have no actual UK tax liability.
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