Expat tax advice needed

[digger_R]

I'm wondering if some of you smart folk can help.

I left the Uk in Dec 2006 to work in Germany (where I am now) and as such I've been paying tax on my income in Germany since then. FYI the German tax year runs Jan to Dec.

My issue is that for the tax year 2006, I left the Uk before the end of the tax year and then started paying into the German system at the start of 2007.

The double taxation treaty is the confusing part - I'm unsure whether my mistake was to pay into the German system on arrival here. My understanding is that the Uk authorities will want some of my income, as far as they are concerned I was a tax resident in the Uk for 2006.

Any advice would be appreciated.

digger

[thewave]

digger_R said:

I'm wondering if some of you smart folk can help.

I left the Uk in Dec 2006 to work in Germany (where I am now) and as such I've been paying tax on my income in Germany since then. FYI the German tax year runs Jan to Dec.

My issue is that for the tax year 2006, I left the Uk before the end of the tax year and then started paying into the German system at the start of 2007.

The double taxation treaty is the confusing part - I'm unsure whether my mistake was to pay into the German system on arrival here. My understanding is that the Uk authorities will want some of my income, as far as they are concerned I was a tax resident in the Uk for 2006.

Any advice would be appreciated.

digger

You were resident in the UK for the part of 2006/07 tax year, assuming you filled in a form P86 to declare your intention to work abroad, and this contract to work abroad will last at least three years, you will be non-resident since it will be assessed on the split year treatment, therefore your income from the point you left the UK for a permanent contract would not be taxable in the UK.

In summary. You were resident for part of the tax year 2006/07. Assuming you left the UK to take up full time employment, the period from Dec to Apr will not be taxable in the UK under split year treatment, providing you are non resident for the whole 2007/08 tax year.

You really should have an accountant sort this for you, with all the facts (dates etc) in front of them.

[Eric Mc]

The problem with these types of situations is that you don't just need advice on the UK tax treatment but also on the tax treatment in your new resident country.

So you might need to talk to a German tax expert as well.

[digger_R]

Thanks for your advice, I completed the P86 when I left the country last year. I wasn't aware of the split year treatment at all.

I have a German tax advisor. He stated I should pay tax to the German authorities (which I have been doing).

My issue is that it seems to be very hard for me to get info on exactly what I should or shouldn't do with regard to my Uk liability.

When I last made the move in 2003, I took advice from KPMG in the Uk and had the same German tax advisor (I was a permanent employee at that point). Now I'm self employed things are somewhat mroe confusing.
When I left in 2003, I don't believe KPMG actually did much else on my behalf (other than completion of the P86).

Thanks again

[thewave]

Eric Mc said:

The problem with these types of situations is that you don't just need advice on the UK tax treatment but also on the tax treatment in your new resident country.

So you might need to talk to a German tax expert as well.

The German taxes need only be declared in germany from the point he entered the country, (and as he entered at the start of the german tax year, which has only just finished, liabilities will be calculated thereon), there is no need for the UK income to be taken into account.

The P86 is essential, and therefore the split year treatment is all that's required, therefore you're non resident for dec to 5-Apr (assuming dates stack up) and no income from Germany needs to be declared, only your UK income.

[digger_R]

thewave said:

Eric Mc said:

The problem with these types of situations is that you don't just need advice on the UK tax treatment but also on the tax treatment in your new resident country.

So you might need to talk to a German tax expert as well.

The German taxes need only be declared in germany from the point he entered the country, (and as he entered at the start of the german tax year, which has only just finished, liabilities will be calculated thereon), there is no need for the UK income to be taken into account.

The P86 is essential, and therefore the split year treatment is all that's required, therefore you're non resident for dec to 5-Apr (assuming dates stack up) and no income from Germany needs to be declared, only your UK income.

Excellent thanks for your input, is there anything specific I need to do beyond the P86 for the split year treatment. If so, would I require a Uk tax advisor/accountant for that.

[thewave]

digger_R said:

thewave said:

Eric Mc said:

The problem with these types of situations is that you don't just need advice on the UK tax treatment but also on the tax treatment in your new resident country.

So you might need to talk to a German tax expert as well.

The German taxes need only be declared in germany from the point he entered the country, (and as he entered at the start of the german tax year, which has only just finished, liabilities will be calculated thereon), there is no need for the UK income to be taken into account.

The P86 is essential, and therefore the split year treatment is all that's required, therefore you're non resident for dec to 5-Apr (assuming dates stack up) and no income from Germany needs to be declared, only your UK income.

Excellent thanks for your input, is there anything specific I need to do beyond the P86 for the split year treatment. If so, would I require a Uk tax advisor/accountant for that.

From the information you've provided, on the foreign pages you need to tick the box to request split year treatment. Box 9.7 should also be ticked and importantly, correspond to the date you entered on form P86.

The other pages of your return need to be filled in as normal.

All this is stating, is that you left the UK for a permanent position abroad. If you do not satisfy the non residency criteria for 2007/08 you cannot claim split year treatment, and the double taxtation treatment will then be used.

Your liability will be worked out as normal on your UK income, and the German income does not appear on the return.

Worth getting an advisor to check this over IMO. As it's easy for me to say the above with the limited information I know. You need to ensure non-residency dates are correct for the 2007/08 tax year, you also need to ensure that on the pro-rata basis of that period you left the UK, you didn't exceed the 90 days.

I'm also assuming your income abroad is carried out wholly outside the UK.

PS

You shouldn't have left it till the last minute!

[digger_R]

@thewave - are you telling me I need to complete a tax return for 2006, ie in the next two days.
I have the sinking feeling that's exactly what your telling me.
Do I not like that.

I had hoped my P86 going in a year ago would be the end of it.
It looks like my ship is sinking, rapidly

[thewave]

digger_R said:

@thewave - are you telling me I need to complete a tax return for 2006, ie in the next two days.
I have the sinking feeling that's exactly what your telling me.
Do I not like that.

I had hoped my P86 going in a year ago would be the end of it.
It looks like my ship is sinking, rapidly

I've made the assumption that you've been sent a return, I thought I read you were self employed, however I see that's in Germany, and you make no reference to the type of work carried out in the UK.

One point.

If you were on PAYE prior to leaving the UK, it's possible you could be entitled to a tax refund anyway, based on the personal allowances only being 9/12ths? So potentially worth doing anyway?

[digger_R]

thewave said:

digger_R said:

@thewave - are you telling me I need to complete a tax return for 2006, ie in the next two days.
I have the sinking feeling that's exactly what your telling me.
Do I not like that.

I had hoped my P86 going in a year ago would be the end of it.
It looks like my ship is sinking, rapidly

I've made the assumption that you've been sent a return, I thought I read you were self employed, however I see that's in Germany, and you make no reference to the type of work carried out in the UK.

One point.

If you were on PAYE prior to leaving the UK, it's possible you could be entitled to a tax refund anyway, based on the personal allowances only being 9/12ths? So potentially worth doing anyway?

I was PAYE in the Uk before I left. I've just had another look at the P85 I filled out, at the top it states I should complete the form if I wish to claim an income tax payment. As far as I'm aware I should receive a rebate as a result.