uklass2010

Hello

We have been in the Middle East for over a year (One full tax year) and only just found this site. It is excellent....and funny!

I tried to search for an answer on this Q but my pc is very slow to move from page to page.

We have a house in the UK. Not rented out. My husband is declared non-resident but not me or the children. We have his salary paid into a UK onshore bank account. Is this ok or crazy? We did speak to a Financial advisor before we left but he was very casual about it all and said we would be fine as long as we stayed one tax year. This was enough for my husband but I have niggling doubts that we are going to end up in big trouble. Can someone please confirm if we are ok or crazy???

Also, neither my husband or I have a pension over here and wondering what you guys do?

Sorry this seems obvious but like I say I can't shake this doubt.

Thanks in advance for your help.

sue02

Hi uklass2010
I agree, you can't help but think you're digging a hole for yourself somewhere down the line.....We found this answer to a question asked in last weeks National re money being transferred to the UK for a mortgage, hope it helps!

"As you are non-resident in the UK during the current tax year, you will not be taxed on any monies sent to the UK provided they were earned overseas. As a non-resident you must not spend more than 90 days in the UK during the official tax year. You will have a potential tax liability only if you return to the UK partway through a tax year having spent less than five full years overseas as you could be subject to UK income tax in that final year depending on when you return. Providing you are only sending income and not capital back to the UK you aren't liable to income tax on your overseas earnings. If you let your property you could be liable to tax on that income, less property-related outgoings such as mortgage payments. In addition such income must be reported to HMRC."
Sue2

Bahtatboy

I'm in what might sound like an even more precarious situation, but have discussed this at length with the IR and a tax consultant. I'm living here but am actually employed by a UK company, with a UK contract and paid in pounds sterling (ouch) each month from that UK company into my UK bank account (wife and sprogs at home, so that's where most of my expenses are). Despite all that the IR have given me an NT (no tax) tax coding, and my tax consultant confirms that I am not liable for UK income tax.

There are two criteria your husband must fulfill. First, the origin of the income: he must earn it outside the UK. Doesn't matter where the money actually comes from (in my case it comes from the UK), nor where it goes (again, in my case to the UK). Second, he must comply with the not-ordinarily resident status, full details of which are on the IR's website. You don't have to wait a year to stop paying tax, but you do have to be out a full tax year not to have liability.

Sounds like you have nothing to worry about. As Bob Marley says, Relax, Be Happy, Everything gonna' be alright!

Meow

And you know who wrote that?

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Meow

Correct.

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Meow

To be frank, it doesn't matter whether or not you have completed and returned HMRC form P85, by being out of the country you will also be deemed non-resident provided you have spent less than 90 days in the UK in the tax year. You can complete the form retrospectively and I suggest you do so, for the sake of clarity.

UK Financial Advisers are rarely familar with the relevant tax legislation, although sadly few over here are either.

Why on earth would you have the salary paid to a UK bank account? That is asking for a HMRC investigation. If income is in Sterling get it paid to an offshore account.

Just being out of the UK for a full tax year is not always enough as liability remains for partial tax years spent in the UK. Depending on when you return you could also have a liability for that year too.

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uklass2010

thank you all so much for your answers.

I feel a bit at ease now but am still concerned after Meow answers about partial years. We did actually open an offshore account but we never got it opened in time for first salary to be paid into. The money going into the UK account never got taxed so we just left it there. We will now change salary details to get it paid into the offshore account. We are paid in pounds sterling so that should be ok.

thank you

Meow

In short - if you are out of the UK for less than five full tax years, then partial years could be subject to UK income tax.

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Millhouse

I have a bit of a question on this point... I've been out 2 years and am non-resident and I have nothing in the UK apart from a couple of reasonably empty bank accounts.

However, occasionally I have to move large sums of money (say 50k GBP) through a UK account as that is the only way I can move it to my offshore one. I know there is no tax issue (it's only in the UK for a couple of weeks normally) but could that trigger a review?

Meow

Highly unlikely. And if any questions were asked you are in the clear anyway.

I trust you are obtaining fee-free wholesale exhange rates?

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Opponent

I could be wrong but doesnt this only apply to capital gains tax

http://www.hmrc.gov.uk/CNR/faqs_capgains.htm - Question 4

Meow

No. Less than five full tax years out and you could be subject to income tax on partial years. I wouldn't say so otherwise. The question was about income tax. If you want to know about CGT, then you are generally exempt if non-resident for five full tax years.

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Millhouse

pretty much... well apart from the 15-20 quid fee that is applied in the UK to receive it and the 40Dh I pay here.

I actually do the transactions at UAE exchange (!). 300k Dh in cash over the counter - they normally give me the spot rate (or very close to it) as shown on my blackberry when I do the deal. Last deal I did, the spot rate was 5.515 and they did it for 5.55. I'm amazed as how close the spreads are, HSBC were offering 5.89 or something stupid.

On an all in basis, I'm very happy with the fees paid & rate...!

gottheTshirt

Why on earth would you have the salary paid to a UK bank account? That is asking for a HMRC investigation. If income is in Sterling get it paid to an offshore account.

you would have a UK bank account because then you don't pay tax on the money remitted into the UK while you have a NT status

Geo79

I also thought this only related to CGT. When is partial years income subject to UK income tax if you have spent less the five full tax years out of the country? You state it "could be" rather than "it is".