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Tax advice for spilt year...

Tax advice for spilt year...

Old Mar 14th 2013, 3:23 pm
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Default Tax advice for spilt year...

Hi all, can anyone help regarding a tax issue I have.

I am looking to depart to middle east at some point in the summer however wondered how this will affect my earnings aboard and UK earning up to this point. Is my understanding correct that:
1. I will be entitled to a tax rebate on UK earnings up to that point in time that I depart the UK.
2. I will then benefit from tax free status on rest of my salary generated abroad this financial year providing that I stay away for the whole of the following tax year in order that the spilt-year rule applies (in my case this will be April 2015)?

If I were to return to the UK before (April 2015) how would my tax liabilities be calculated? Is it calculated on money brought back into the uk or is it based on earnings whilst I was away. Is this affected further by the virtue I am paid a basic salary followed by an living allowance?

Assistance would be most appreciated.

Last edited by GFUL; Mar 14th 2013 at 3:29 pm.
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Old Mar 14th 2013, 3:48 pm
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Default Re: Tax advice for spilt year...

Originally Posted by GFUL
Hi all, can anyone help regarding a tax issue I have.

I am looking to depart to middle east at some point in the summer however wondered how this will affect my earnings aboard and UK earning up to this point. Is my understanding correct that:
1. I will be entitled to a tax rebate on UK earnings up to that point in time that I depart the UK. No - unless you have overpaid tax that year, which will have happened if you are on PAYE due to the way your annual Personal Allowance is averaged each month
2. I will then benefit from tax free status on rest of my salary generated abroad this financial year providing that I stay away for the whole of the following tax year in order that the spilt-year rule applies (in my case this will be April 2015)? Yes, you must work full-time overseas for a full tax year in order to qualify for the split year concession, but you can have limited visits back to the UK - See HMRC6 guidance, Section 8.5 for details.

If I were to return to the UK before (April 2015) how would my tax liabilities be calculated? Is it calculated on money brought back into the uk or is it based on earnings whilst I was away. Is this affected further by the virtue I am paid a basic salary followed by an living allowance? You will have to pay UK Income Tax and NI on all of your overseas earnings, including allowances.

Assistance would be most appreciated.
See comments in Red. Also, there's a new Statutory Residence Test that might kick in next month which you should be aware of, but working full time overseas and limiting visits (91 days)/ working days (31 days) in the UK should keep you non-resident.

Last edited by Johnnyboy11; Mar 14th 2013 at 4:49 pm.
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Old Mar 14th 2013, 4:14 pm
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Default Re: Tax advice for spilt year...

I think the above from JB11 answers all your points. You can also look at the draft HMRC Guidance for the statutory residence test which is expected to come into force from April 2013. Providing you are leaving UK to work on a contract of employment lasting a full tax year it is expected that there will be no change to the split year treatment. The Guidance does however include a table to show the number od days you can spend back in the UK, after you have left , during the split year.
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Old Mar 14th 2013, 4:48 pm
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Default Re: Tax advice for spilt year...

Here's a flowchart by KPMG to the new SRT:

Link
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Old Mar 14th 2013, 5:20 pm
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Default Re: Tax advice for spilt year...

Really appreciate all the information and makes it clear what I have to do to benefit from tax free salary. Thanks all!
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Old Mar 20th 2013, 7:18 pm
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Default Re: Tax advice for spilt year...

Hi everybody,


My husband has been employed(by contract) and paid by British agency(based in London) . The job is in Dubai and Qatar. He has been working here in the region for more then a year.


I was told that despite of him working in Dubai,he has to pay a full tax back in UK,because his official employer is UK based.


Is it true?

I will appreciate your reply. Thank you very much.
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Old Mar 21st 2013, 2:55 am
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Default Re: Tax advice for spilt year...

Originally Posted by Southfields
Hi everybody,


My husband has been employed(by contract) and paid by British agency(based in London) . The job is in Dubai and Qatar. He has been working here in the region for more then a year.


I was told that despite of him working in Dubai,he has to pay a full tax back in UK,because his official employer is UK based.


Is it true?

I will appreciate your reply. Thank you very much.
No. It is not true. Where he is paid is irrelevant. His contract must cover a full tax year. He should submit form p85
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Old Mar 21st 2013, 7:06 am
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Default Re: Tax advice for spilt year...

Originally Posted by Southfields
Hi everybody,


My husband has been employed(by contract) and paid by British agency(based in London) . The job is in Dubai and Qatar. He has been working here in the region for more then a year.


I was told that despite of him working in Dubai,he has to pay a full tax back in UK,because his official employer is UK based.


Is it true?

I will appreciate your reply. Thank you very much.
Not tax (assuming he is non-resident for tax purposes), but if he is on a UK contract then he will have to pay UK National Insurance for 52 weeks.
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Old Mar 21st 2013, 10:02 am
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Default Re: Tax advice for spilt year...

Thank you for your replies.
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