Baraka

Hi

Here's my situation:

• I am a British citizen and have been in the UK for the past 3.5 years
  
• I left the UK in January 2012; filled in form declaring myself to be non-resident
  
• Didn't work out in UAE, so handed notice into work, terminating contract and leaving Dubai in February 2013

Based on above, will I be liable to pay tax on income earnt in the UAE for the tax year 2012 - 2013, and if so, what is the way around this?

Thank you for your advice!

scot47

You are liable. The income for that period will be aggregated with your other income for the tax year 12-13 - if you go back to the Yookay !

bahrain saudi

You are only liable for income earned in the UK from your return date - Feb 2013 - the end of the tax year.

You are NOT liable for income earned in Dubai from Jan 2012 - to end of that tax year OR on Dubai incomes in the 2012 - 13 tax year.

Chill, Winston.

You will not, I guarantee you, be hit with a tax bill. Unless, of course, you were working for UK company, paying UK tax and being paid into a UK based account. (and simply on an overseas posting). From your OP, I assume that is not the case!

mentalist

You may wish to check with Meow that this is correct. I have my doubts.

csdf

You were not out for a full tax year (April-April) so I suspect you will be liable

Meow

.

Johnnyboy11

See HMRC6 Section 8.5 about becoming UK Non Resident and then Section 8.7 about returning to the UK and becoming UK Resident again.

Basically, you need to work overseas on a full-time employment contract for a full tax year and limit your return visits to the UK, to become UK Non-Resident for UK tax and NI purposes.

Some suggestions:

(i) If possible, delay your termination date to after 6th April 2013. That way you will complete a full tax-year and become UK Non Resident for your whole time in the UAE.

(ii) If not, try to secure another full-time employment contract overseas to run consecutively with your current one. Don't leave any gap in-between.

(iii) After you stop working for your current employer, don't set foot in the UK until after 6th April 2013. This will give you some 'flexibility' should HMRC enquire about your working arrangements overseas.

(iv) Keep your air tickets/ boarding pass as proof when you returned to the UK (after 6th April).

(v) Otherwise, to reduce your tax bill, you might consider paying your UAE earnings (or savings?) into a UK personal pension (e.g. SIPP) to receive a tax rebate of 20%, 40% or 50% depending on your marginal tax rate. You can start drawing a pension at 55, and get a 25% lump sum too. You need to do this before the end of the current tax year.

Hope this helps.

Ash786

I have a similar question. I am British born and left my then employer in July 2012 for a position in Saudi Arabia (first time I have worked overseas). I didn't fill the the p85 as I wanted to first see how things worked out here before committing long term. The original plan was to come back in Jan 2013, fill in the P85 and then come back to Saudi with the family.

Things haven't gone to plan and I am returning to the UK in January 2013. I work for a German company in Saudi and they have paid my salary into my UK account directly. I will resign from them and find a job in the UK.

1) I assume that I am liable for tax from July 2012 - Jan 2013?

2) What documents do HMRC require, if any, when completing the self assessment?

3) Would HMRC want to see bank statements?

4) My company have given me payslips every month, would HMRC want to see these? Would they contact the company as well?

5) I am tempted to try this old chestnut and if/when asked by HMRC where I was between July 2012-Jan 2013, I would reply that I took a "career break". Worth a try or not worth the risk?

6) Failing the above, I may try this; say I was on a "career break" from July 2012 - October 2012. Then had a three month contract in Saudi. This one seems a bit more palatable as it get HMRC off the scent if I declare something rather than nothing. Worked 6 months - pay 3 months tax

7) Would HMRC contact the UK Border Agency / Saudi immigration just to check where I was between these dates?

Sensible advice greatly welcome.

Ash786

apologies for hijacking someone else's thread...

Johnnyboy11

See my comments above. Basically you are still UK Resident and liable for UK Income Tax and NI on all your earnings in KSA. In your case, you'd need to work overseas until April 6th 2014 to become UK Non-Resident, since this current tax-year was split.

Be very wary about misleading or lying to HMRC - It's a criminal offence and could land you with a significant fine (or jail time in extreme cases). You'll also have a criminal record, which won't help your UK employment prospects.

Ash786

Glad you told me that...before I left the UK I spoke to an accountant and he suggested the opposite. He said that HMRC have enough on their plate chasing big companies without worrying about one individual. I replied it would cost HMRC less to chase me than it would for them to chase a big company. He then went silent and I left his office.

bahrain saudi

He was paid offshore. He wont pay a penny

Meow

Wrong.

Baraka

Thank you all for your advice so far, especially JohnnyBoy11 for your detailed response.

I've noticed there is some conflicting advice and this has been the issue I've been facing to date. Some people have told me that I'll be liable for paying tax on income earnt in the UAE in 2012-2013, and others tell me that I won't.

I understand that any income brought back to the UK may be taxable, but how can any offshore income be taxed?

I've read section 8.5 of that document, and also section 5.11, which describes periods of being a temporary non-resident (which may be applicable in this case). In these sections, I don't see any evidence of me being taxed on income I've earnt in the UAE.

Section 5.11 (Temporary non-residents and the remittance basis) reads,

That says quite clearly that income from employment is not taxed.

Johnnyboy11

For you, the simple way to look at the UK tax and NI system is like an on-off switch. If you are classed as UK Resident (your default position), you pay full UK tax and NI on all earnings you make anywhere in the world, no exceptions. However, if you meet the criteria in HMRC6 Section 8.5, then you can be become UK Non-Resident effective from the day you left the UK. In that case the switch is off and you pay no UK income tax or NI on your overseas earnings. There is no in-between position so it doesn't matter who your employer is, where they are based, how/ where you get paid, or what money you send back to the UK.

It is hugely important therefore that you complete a full tax year working under a full time employment contract abroad, and limit your visits back to the UK. If you don't do this then the switch remains in the default 'on' position and you pay the full whack on all your overseas earnings.

There is another concession, if you leave the UK permanently (not necessarily to work), and don't repatriate for at least 3 years. But that won't apply to you, for now.

Hope this clarifies.