jay11

I will be moving to Saudi Arabia on a permenant contract in a few weeks and was wondering what I should be doing about UK taxes.

I have some savings I am currently earning interest on, this interest is taxed by the bank in the UK at the normal rate.

The Saudi company will be paying my wages into the UK bank account.

What tax am I liable to pay?

What happens if I don't fill in a P85 and return it along with my P45 (apart from the obvious non-rebate scenario).

Eeyore

From what little I know about this sort of thing, paying wages directly into a UK bank account isn't such a good idea. Is there any reason why you can't set up an account at a Saudi bank and get your wages paid there? You won't have to worry about taxes, and you won't get stung by exchange rates and transfer fees every time you want to access your money.

jay11

Thanks for your advice,

What are the tax issues if/when I would want to bring money back from an offshore account into the UK to buy a house etc. once I'm settled back in the UK after retirement. And when I want to transfer money to relatives etc. whilst still overseas?

I think I need to speak to an international tax advisor!

Eeyore

I don't know what they are exactly, but I do know that they exist. You can get round them with the right advice.

You're not wrong there

expatadvisor

This issue raises a myriad of points, if you have a permanent contract in Saudi what is your personal situation in the UK ? There is an ongoing review re residency at this time (MMRC since 2003 !!) according to current HMRC thinking you can work abroad and so long as you have UK based accounts, receive income in a UK based account, have a UK property then you could possibly still be regarded as being UK resident for tax purposes irrespective of the amount of days you spend in or out the UK. Basic advice would be to open an offshore based account to which your salary is paid into and move all savings offshore for tax efficiency. Yes open a Saudi based account as suggested for salary to be paid into would even be better as suggested elsewhere.

The aim is to be tax free, but please be sensible and listen to advice.

jay11

I have decided to get all my salary paid into a Saudi account and have also stopped recieving any interest from my UK based acount and will not be paying any salary into it.

I think that should do it, and no I don't own any property in the UK.

Meow

You need to elect to be non-resident, but have to spend less than 90 days (plus days arriving & departing as a HMRC concession) in this tax year in the UK for it to apply this year.

You can continue to receive interest on UK deposit accounts, but there are forms that you can complete to receive it gross if non-resident.

Send me a private message for more info. (I am a UK & UAE authorised adviser)

jay11

I have PM'd but not sure if it has gone through.

Let me have a stab at this.

Say I leave the UK on august 17th then I would have been in the UK ~135 days this tax year and to average <90 over 4 years I could have up to another ~50 days in the UK this year as long as I only came back to the UK for ~60 days in the next 3 tax years after that?

Am I close? or miles away?

The way I see it I will only be coming back to the uk for a maximum or 21-28 days a year for the next 5 years if that.

Where would I stand wrt being a non-tax resident, do I have to give a copy of my perm contract along with the P85?

Blue Cat

your private message facility isn't activated until you have posted 5 times. Post again and then contact MEOW, she is a financial adviser etc.

jay11

thanks!

Blue Cat

pleasure!! now you can PM her!

expatadvisor

A word of warning here. I referred to an Inland Revenue Non residency and domcile review which has been going on since 2003 well the jist of this is that the revenue is reviewing some cases where although an individual has worked abroad and adheres to the 91 day rule the fact that he/ she remits earned income to the UK, has a property here, spends income here, has deposit accounts in the and returns back to the UK on leave is enough to regard that individual as continuing to be UK resident for tax purposes. This review is ongoing and is well known in specialist accountancy circles and the revenue is testing a number of cases at this time. IR 20 is meant as a guideline it is not the definitive article.

I state the above on personal experience with a client and also with a colleague at a large firm of chartered accountants who has been dealing with the same scenario.

Ignoring the above comments though IR20 states that you must complete one full tax year out of the UK working to be regarded as being non resident, thus if you leave the UK on 17th June 2007 and return June 18th 2008 you will be taxed on all your earned income abroad as you have not completed one full tax year out of the UK. Return on the 6th April 2009 and on the basis that your return visits inbetween are within the revenues limits then you will be fine.

Submit your P85 would be the sensible immediate thing to do, so at least you are informing the Inland Revenue of your intention to leave the Uk to work abroad.

Forgetting again about the above words of warning then keeping capital on deposit in the UK is OK but as it builds up remember that the interest is still liable to tax even though you can complete a form to obtain interest gross. Even as a non resident you can retain personal allowances in the UK and once interest has exceeded your personal allowance limit then you will pay tax on it. It is generally better advice to keep capital offshore where you can earn gross interest on it and not be concerned about allowances etc.

jay11

Expatadvisor,

I think you've managed to confuse me again, not difficult! Did you mean return in April 2009 and not 2008? If not can you explain a little the rationale behind it.

Also If I have no house in the UK and will not be remitting any wages here but do hold a bank account here that is not paying me any interest and I adhere to the days in the UK (i.e. averaging way less than 91 a year...if that)....phew....should I be okay?

expatadvisor

sorry altered to 2009, apologies for that. From what you say I am sure you will be fine, good luck.

expatadvisor

Forgot to add that the form you require to claim interest gross, if you wish monies to say invested in UK based banks is the R85: both the P85 and R85 forms are available to download from the Inland Revenue website.