Leaving Blighty to work abroad: income tax & residency?
Discussion
Hello guys! 
I don’t have an accountant as my tax affairs have always been simple, partly because I have an unimpressive 5 figure PAYE salary and nothing else. Hoping somebody on here might be in a position to assist based on own experience or accountant knowledge.
THE FACTS
I work for a UK PLC. They have offices in Eastern Europe (EE) and offered me the opportunity to move over to EE and work there full time for a couple years, with only occasional travel back to UK, starting April 2022. I will be on a UK employment contract and my salary will be paid into my UK account as per usual.
STATUTORY RESIDENCE TEST (SRT)
There’s something called the Statutory Residency Test (SRT), which helps to determine if you're a non-UK resident for income tax purposes.
The 4 key components are:
(1) First automatic UK residence test: if I spend over 183 days in the UK in any tax year, I would be considered a UK tax resident. My intention is to spend around 40 days in the UK each tax year (working up to 30 and the other 10 holiday days), so let’s assume I pass this one
(2) Second automatic UK residence test: if I spend up to 91 consecutive days in my UK home, including 30 inside the tax year, then I’m UK resident, provided I don’t have a home overseas. I will be renting in the EE city where I will be working, hence I assume I satisfy I pass this one too
(3) Automatic overseas test (AOT): if I work full time outside the UK, spend less than 91 days in the UK and the number of days on which I work more than 3 hours in the UK is less than 31, then I also pass this one
(4) Sufficient ties test: this applies to persons who are neither automatically non-resident under the AOT nor automatically resident under the automatic UK tests. The more ties you have, the less time you can spend in the UK before becoming a tax resident.
(a) Family tie – I’m single, have no kids, its just my folks here, nobody else (no ties)
(b) Accommodation tie – do you have a place to live in the UK, even if it is for 1 night (yes, I have somewhere to live)
(c) Work tie – do you work more than 40 days a year in the UK? (3 hours of work a day or more). I’m unsure on this one just yet and it is one of my questions
(d) 90 day tie – have you spent more than 90 days in the UK in either of the last 2 tax years? (yes, I have been here all of my adult life)
MY QUESTIONS
1. On the face of it, my summary understanding of the SRT regime is that I’ll be non-UK resident for the tax year if I work full-time overseas during that tax year and spend less than 91 days in the UK in that tax year and the number of days on which I work for more than 3 hours in the UK is less than 31 and there are no significant break from my overseas work. Seems simple, but what happens if I work more than 31 days in the UK, but less than 40 though, so as not to trigger the Work Tie part of the Sufficient Ties Test?
2. If I do go in April 2022, my guess is that I need to inform HMRC by filling in Form P85. Is there anything else that needs to be done by either me or UK PLC?
Thanks in advance, I appreciate this is not a simple area of our tax system!
I don’t have an accountant as my tax affairs have always been simple, partly because I have an unimpressive 5 figure PAYE salary and nothing else. Hoping somebody on here might be in a position to assist based on own experience or accountant knowledge.
THE FACTS
I work for a UK PLC. They have offices in Eastern Europe (EE) and offered me the opportunity to move over to EE and work there full time for a couple years, with only occasional travel back to UK, starting April 2022. I will be on a UK employment contract and my salary will be paid into my UK account as per usual.
STATUTORY RESIDENCE TEST (SRT)
There’s something called the Statutory Residency Test (SRT), which helps to determine if you're a non-UK resident for income tax purposes.
The 4 key components are:
(1) First automatic UK residence test: if I spend over 183 days in the UK in any tax year, I would be considered a UK tax resident. My intention is to spend around 40 days in the UK each tax year (working up to 30 and the other 10 holiday days), so let’s assume I pass this one
(2) Second automatic UK residence test: if I spend up to 91 consecutive days in my UK home, including 30 inside the tax year, then I’m UK resident, provided I don’t have a home overseas. I will be renting in the EE city where I will be working, hence I assume I satisfy I pass this one too
(3) Automatic overseas test (AOT): if I work full time outside the UK, spend less than 91 days in the UK and the number of days on which I work more than 3 hours in the UK is less than 31, then I also pass this one
(4) Sufficient ties test: this applies to persons who are neither automatically non-resident under the AOT nor automatically resident under the automatic UK tests. The more ties you have, the less time you can spend in the UK before becoming a tax resident.
(a) Family tie – I’m single, have no kids, its just my folks here, nobody else (no ties)
(b) Accommodation tie – do you have a place to live in the UK, even if it is for 1 night (yes, I have somewhere to live)
(c) Work tie – do you work more than 40 days a year in the UK? (3 hours of work a day or more). I’m unsure on this one just yet and it is one of my questions
(d) 90 day tie – have you spent more than 90 days in the UK in either of the last 2 tax years? (yes, I have been here all of my adult life)
MY QUESTIONS
1. On the face of it, my summary understanding of the SRT regime is that I’ll be non-UK resident for the tax year if I work full-time overseas during that tax year and spend less than 91 days in the UK in that tax year and the number of days on which I work for more than 3 hours in the UK is less than 31 and there are no significant break from my overseas work. Seems simple, but what happens if I work more than 31 days in the UK, but less than 40 though, so as not to trigger the Work Tie part of the Sufficient Ties Test?
2. If I do go in April 2022, my guess is that I need to inform HMRC by filling in Form P85. Is there anything else that needs to be done by either me or UK PLC?
Thanks in advance, I appreciate this is not a simple area of our tax system!
You're right. Its complex - have you asked your employer if they will provide tax support for you whilst you are working abroad? Have they explained to you how they will manage their likely tax withholding obligations in EE as you continue on uk payroll? Depending on which country you are going to you may have ongoing NIC withholding as well. Again something that will be on your employer to deduct as they will also have their employer obligation.
Drop me a PM if you want.
Drop me a PM if you want.
Gassing Station | Finance | Top of Page | What's New | My Stuff