Just Browsing

If I was to be offered a one year contract starting in June this year I obviously would not be out of the country for one complete tax year - I understand that. My intention is to either renew that contract or move into a different role so I will be out of the country for more than one tax year.

My question is - if I put on the HMRC form (P85 I think?) it's just a one year contract will they automatically dismiss my claim as a non resident? If so what if I put 2 years - are there any pitfalls to this "white lie"? It is my intention to be out of the country for a good few years so what's the best option?

lionheart

You could describe it as a one year rolling (renewable) contract, perhaps.

Just Browsing

Yeah, i was thinking that myself - would it work though!!

Old Lob

No it would not work.

You already have the solution - your intention ois to stay abroad - that will do.

Bonny Boy

Yes that's right. In general your intentions are sufficient - until/unless your actions prove otherwise.

So if you don't achieve your intention, by the action of going home before a complete tax year, you will have a tax issue at that point, not before. If you do achieve your intention of staying out a complete tax year - and hence potentially qualifying as Non Resident subject to the other conditions - then you are OK.

Just Browsing

Ok, thanks guys - so lets say I put on the P85 that my contract is only 12 months - what will the tax office come back with? Will I have to pay tax and then claim it back or something? Also, as I have a tax enquiry still outstanding will this affect anything?

Bonny Boy

You will only have to pay tax, should you owe any, when you fill out your Self Assessment tax return at the end of the 08/09 tax year.

By the return date of this, you will either have got your contract extended, or else be able to state an intention to remain outside the UK 'indefinitely.'

All things being equal, you will then be able to take split year treatment for 08/09 - ie pay tax on your UK earnings up to June 08, but not on your overseas earnings thereafter. Of course, should you return to UK before the end of the 09/10 tax year, and hence not complete a tax year outside the UK, all this will change, and you will revert to being Resident throughout, with corresponding tax implications.

It all boils down to what you eventually do.

Have a look at the HMRC website, in particular SA109 - Non-Residence, and SA109 notes on Non Residence.

Old Lob

No - do nothing of the sort - just say that you have a job in Dubai and that it is your intention to remain overseas for at least 5 years.

Don't lie and don't complicate is the best advise.

Just Browsing

Cheers guys, that clarifies things.

benzonar

Keep in mind you may be due a rebate for Apr/Jun if you get non-resident status.

If your tax allowance is 5333 for example then you may have paid tax for April already based on being resident. So if you leave in June you should not have to pay any tax on earnings upto your allowance, hence a rebate may be due.

MrsHaps

Im filling mine in and stating that i am not planning to come back! Because i am not, or at least i dont have a date in mind right now!!