Working overseas / tax query
Discussion
I'm considering taking a job overseas and would appreciate some advice on tax issues. Details below.
1. I am currently employed in the UK and pay tax through PAYE.
2. I would be looking to start work in Dubai within the next two months.
3. The company I would be woprking for in Dubai are registered in the UAE but also have offices in the UK.
4. I would be granted a residence visa for the UAE.
5. I would retain my own property in the UK and would probably come home on holiday twice before the end of this tax year.
6. I will be paid in local currancy.
7. I am a British citizen
Assuming that I start my new job in the next two months will I pay tax on my earnings for the remainder of this tax year? I've looked on the IR website but am confused about the definitions of resident, ordinary resident and domiciled.
Thanks and all the best.
Martin.
1. I am currently employed in the UK and pay tax through PAYE.
2. I would be looking to start work in Dubai within the next two months.
3. The company I would be woprking for in Dubai are registered in the UAE but also have offices in the UK.
4. I would be granted a residence visa for the UAE.
5. I would retain my own property in the UK and would probably come home on holiday twice before the end of this tax year.
6. I will be paid in local currancy.
7. I am a British citizen
Assuming that I start my new job in the next two months will I pay tax on my earnings for the remainder of this tax year? I've looked on the IR website but am confused about the definitions of resident, ordinary resident and domiciled.
Thanks and all the best.
Martin.
As you were born in the UK (presumably) you are UK Domicile. Your domicile stays with you no matter where you live or where you are working - unless you make a very big effort to prove that you want to change it. This is quite difficult and usually entails breaking all contact with your "home" country of birth.
As you are currently living in the UK you are Ordinarilly Resident in the UK.
As you are working in the UK you are Tax Resident in the UK and subject to UK tax on your worldwide income.
If you move abroad to work, and managed to stay out of the UK for an entire tax year, for that tax year, you would be a non-UK tax resident and would not be subject to UK tax on your income.
The tricky part is when the move abroad is DURING a tax year. In that case, you need to look at the number of days in the tax year you were abroad and the number of days you were in the UK.
The basic rule is that the Revenue will consider you a UK Tax Resident if you stay over 183 days in the tax year in the UK. If you stay abroad for more than 183 days in the tax year, your income will be time apportioned between the days abroad and the days in the UK and taxed accordingly.
However, if you are working abroad and do not return to the UK for periods exceeding 90 days in the UK, none of your income will be treated as being UK taxable.
We are already over 90 days into the 2008/09 tax year so you have failed the 90 day test already. This means that you remain a UK tax resident for at least part of 2008/09 tax year and your income will be apportioned - provided that your remaining time in the UK does not push you over the 183 day threshold.
Be aware that the Revenue's method of counting the 90 days has changed this year. Travel days to and from the UK used to be excluded - now they are included.
Even if you are decreed to be a UK tax resident for 2008/09 and possibly subject to UK tax, you will be given credit for any tax suffered tax abroad under the Double Taxation Agreement rules and you will not at least pay tax twice on the same income - which can happen if a DTA is not in place with the foreign country.
As you are currently living in the UK you are Ordinarilly Resident in the UK.
As you are working in the UK you are Tax Resident in the UK and subject to UK tax on your worldwide income.
If you move abroad to work, and managed to stay out of the UK for an entire tax year, for that tax year, you would be a non-UK tax resident and would not be subject to UK tax on your income.
The tricky part is when the move abroad is DURING a tax year. In that case, you need to look at the number of days in the tax year you were abroad and the number of days you were in the UK.
The basic rule is that the Revenue will consider you a UK Tax Resident if you stay over 183 days in the tax year in the UK. If you stay abroad for more than 183 days in the tax year, your income will be time apportioned between the days abroad and the days in the UK and taxed accordingly.
However, if you are working abroad and do not return to the UK for periods exceeding 90 days in the UK, none of your income will be treated as being UK taxable.
We are already over 90 days into the 2008/09 tax year so you have failed the 90 day test already. This means that you remain a UK tax resident for at least part of 2008/09 tax year and your income will be apportioned - provided that your remaining time in the UK does not push you over the 183 day threshold.
Be aware that the Revenue's method of counting the 90 days has changed this year. Travel days to and from the UK used to be excluded - now they are included.
Even if you are decreed to be a UK tax resident for 2008/09 and possibly subject to UK tax, you will be given credit for any tax suffered tax abroad under the Double Taxation Agreement rules and you will not at least pay tax twice on the same income - which can happen if a DTA is not in place with the foreign country.
I am also being interviewed for a position in Dubai, so this thread is naturally of interest. Does anyone know what the tax position is regarding sending money back to the UK to pay any mortgage commitments?. Also assuming everything happens and I return in say 5 years with a chunk of savings how would that be treated as well ?
Any help appreciated
Any help appreciated
If you are resident outside the UK and meet all the date and "days inside/outside UK" criteria, money sent back to the UK should escape any UK taxation.
If you are renting out your UK residence whilst abroad (a not unusual scenario), the rent being collected from the tenant should be taxed at source by the letting agent and you would need to complete a UK Non-Resident Self Assessment tax return form to obtain any tax refunds due to you.
If you are renting out your UK residence whilst abroad (a not unusual scenario), the rent being collected from the tenant should be taxed at source by the letting agent and you would need to complete a UK Non-Resident Self Assessment tax return form to obtain any tax refunds due to you.
Eric,
Regarding the 90 day rule, can this be any 90 days within the tax year, or do I have to be resident outside the UK at the START of the tax year in order for this to apply? The reason I ask is that I am currently living and working in the UK but hope to start my new job overseas before the 90 day period following the start of the tax year has elapsed.
Thanks again.
Martin.
Regarding the 90 day rule, can this be any 90 days within the tax year, or do I have to be resident outside the UK at the START of the tax year in order for this to apply? The reason I ask is that I am currently living and working in the UK but hope to start my new job overseas before the 90 day period following the start of the tax year has elapsed.
Thanks again.
Martin.
The following link _might_ be of some help... but then again there are a lot of differing cases out there!!!
http://articles.taxationweb.co.uk/index.php?id=82
http://articles.taxationweb.co.uk/index.php?id=82
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