Tax implications?

Old Dec 23rd 2015, 5:32 pm
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Default Tax implications?

This is my first post so please be gentle with me!!

My husband is going to work in KSA in January...either beginning or end but there has apparently been some delay with his Visa. Myself and our 2 children will be staying behind in the UK in our home (which has a Mortgage on it).

It is a 2 year contract and he will be paid by a Saudi company. He has been told he needs to fill in a form P80?? when he leaves which will mean he is no longer resident in the UK. He will be coming home for holidays and we will be meeting him in Dubai as well but he will definitely be under the 90 days in the UK in a normal year. Im concerned over the fact that he has obviously been a Resident in the UK for this Tax Year so how does that work for the period up until the end of this tax year? Will he need to pay tax on what he earns up until April as he has been a UK resident for more than 183 days(which is the number that keeps coming up on every website I google!). He will be renting an apartment on a compound in KSA but obviously will still own our home over here...Im just really concerned that there will be some issue over his country of residence.

Secondly he will obviously be sending money home to us. We already have HSBC bank accounts and he was planning on getting a SABB account in KSA. Probably a stupid question but Im assuming I won't be liable for any tax on money that he sends over to us?

This is a whole new world for me so I apologise if I sound like I don't know what Im talking about...I really don't have a clue.
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Old Dec 23rd 2015, 7:21 pm
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Default Re: Tax implications?

Originally Posted by stayingbehind View Post
This is my first post so please be gentle with me!!

My husband is going to work in KSA in January...either beginning or end but there has apparently been some delay with his Visa. Myself and our 2 children will be staying behind in the UK in our home (which has a Mortgage on it). [Lots of expats have this arrangement, not a problem]

It is a 2 year contract and he will be paid by a Saudi company. He has been told he needs to fill in a form P80?? [Normal, do it] when he leaves which will mean he is no longer resident in the UK. He will be coming home for holidays and we will be meeting him in Dubai as well but he will definitely be under the 90 days in the UK in a normal year. Im concerned over the fact that he has obviously been a Resident in the UK for this Tax Year so how does that work for the period up until the end of this tax year? Will he need to pay tax on what he earns up until April as he has been a UK resident for more than 183 days(which is the number that keeps coming up on every website I google!). [He will pay UK tax until he leaves the UK, a split year concession is available if he completes a full tax year working full-time overseas] He will be renting an apartment on a compound in KSA but obviously will still own our home over here...Im just really concerned that there will be some issue over his country of residence. [Not an issue, as long as he leaves the UK to work full-time overseas, completes a full tax year and limits his visits back to the UK].

Secondly he will obviously be sending money home to us. We already have HSBC bank accounts and he was planning on getting a SABB account in KSA. Probably a stupid question but Im assuming I won't be liable for any tax on money that he sends over to us? [If he works full-time overseas for a full-tax year, he will have no UK tax liability on his worldwide earnings, so no need to worry about where he sends or spends it]

This is a whole new world for me so I apologise if I sound like I don't know what Im talking about...I really don't have a clue. [We all started out with similar questions, so don't worry about it. Just make sure your hubby completes a full tax year, which will be risky with a Saudi employer. Keep good records of hours worked and days spent in the UK]
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Last edited by Johnnyboy11; Dec 23rd 2015 at 7:27 pm. Reason: fixed a typo
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Old Dec 23rd 2015, 7:56 pm
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Default Re: Tax implications?

Wow thank you so much for the reply...really appreciate it. So he won't have to pay tax on any of his earnings in KSA even though he is going half way through the tax year (and has therefore been domiciled in the UK for some of the year)?

His employer will basically be the same one he has at the moment although he will be paid by the KSA office rather than the UK office. He is over in KSA a huge amount anyway (around a week a month on average) but is obviously paid in the UK at the moment so all he is basically doing is changing his work base if that makes sense?

I figured he'd have to limit the amount of time spent in the UK...as I understand it he can be here for up to 90 days? We will also be going over to the ME to meet him (although its likely to be Dubai or Abu Dhabi rather than actually going to KSA).
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Old Dec 24th 2015, 3:37 am
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Default Re: Tax implications?

Hi. Just be aware that the old 90 day rule has been superseded. Tax residency is tested on the number of remaining connections with the UK, not just time spent in country. With a spouse, dependent children and home in the UK, the length of time he is allowed to spend in the UK in a tax year without losing non-resident status may be less than 90 days. HMRC have guidance:

http://tools.hmrc.gov.uk/rift/screen...ary?user=guest
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Old Dec 24th 2015, 7:03 am
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Default Re: Tax implications?

Originally Posted by Standanista View Post
Hi. Just be aware that the old 90 day rule has been superseded. Tax residency is tested on the number of remaining connections with the UK, not just time spent in country. With a spouse, dependent children and home in the UK, the length of time he is allowed to spend in the UK in a tax year without losing non-resident status may be less than 90 days. HMRC have guidance:

HM Revenue & Customs: Service unavailable
No need to worry about the Connecting Factors if he is working full-time overseas, since he will pass the Automatic Overseas Test. All he need do is minimise his visits back to the UK (90 days) and not work when he is visiting the UK (and of course complete a full tax year).

There are lots of good flowcharts online explaining the new UK Statutory Residence Test, the KPMG one is good and in the third box down the non-resident status is confirmed: "Leave UK to work full-time overseas, present in UK < 91 days Yes and < 31 days spent working in UK ".
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Old Dec 24th 2015, 7:34 am
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Default Re: Tax implications?

Originally Posted by stayingbehind View Post
Wow thank you so much for the reply...really appreciate it. So he won't have to pay tax on any of his earnings in KSA even though he is going half way through the tax year (and has therefore been domiciled in the UK for some of the year)?

His employer will basically be the same one he has at the moment although he will be paid by the KSA office rather than the UK office. He is over in KSA a huge amount anyway (around a week a month on average) but is obviously paid in the UK at the moment so all he is basically doing is changing his work base if that makes sense?

I figured he'd have to limit the amount of time spent in the UK...as I understand it he can be here for up to 90 days? We will also be going over to the ME to meet him (although its likely to be Dubai or Abu Dhabi rather than actually going to KSA).
Correct, he will be tax free from the day after he leaves the UK until the day he becomes resident again, as long as he meets the Automatic Overseas Test (see my above post).

Some tips from me:

(i) Make sure he is physically present and working in KSA before 5th April 2016, then his first full tax year working overseas will end on 6th April 2017. This is very important.

(ii) Ask his current employer for a letter or contract confirming his new job is changing to full-time in KSA.

(iii) Keep good records of his hours worked overseas (e.g. signed timesheets or similar) and all travel tickets (boarding passes), exit permits etc. so there is no room for subsequent dispute.

(iv) Submit form P85 to get a tax refund for the current tax year (He will have overpaid if he is on PAYE).

(v) Assuming your are not working, both of you should consider opening a private pension, online SIPP or similar. Even if neither of you are paying UK income tax, you can still pay £2880 per year into a private pension and get a free £720 each from HMRC. Free money is nice, which you can get our hands on at age 55. Your husband can do this in the current tax year and for the subsequent 5 tax years. You can do it indefinitely.

(vi) Pay off any debt and then your mortgage as quickly as possible, then start saving towards financial security (and/or put the kids through private education in the UK).

(vii) Open a VPN account on your husband's laptop before he arrives in KSA, that way he'll have unrestricted internet access, including watching your Sky TV package.

The lifestyle can be tough at times, but you will get a surprising amount of time together as a family and there's always Skype to help keep in touch. Lots of expats in the ME are in very similar circumstances to yours, and things work out just fine.
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Old Dec 24th 2015, 7:42 am
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Default Re: Tax implications?

Originally Posted by Johnnyboy11 View Post
No need to worry about the Connecting Factors if he is working full-time overseas, since he will pass the Automatic Overseas Test. All he need do is minimise his visits back to the UK (90 days) and not work when he is visiting the UK (and of course complete a full tax year).
Thanks, good info.
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Old Dec 24th 2015, 11:00 am
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Default Re: Tax implications?

Already stated above, but certainly no need to worry about where his money goes (well, from a tax perspective) -- I was officially non-resident for several years but was paid directly into my UK a/c from the UK parent company of the company I was working for abroad. That situation has changed now (different employer), but basically all my salary still gets remitted back to my UK a/c -- so long as one is non-resident as defined by HMRC, it doesn't matter how the money moves.
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Old Dec 24th 2015, 12:51 pm
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Default Re: Tax implications?

Thanks

Tried searching without luck. Maybe I'm doing something wrong.

A few posts elsewhere about it all being done online now?? Don't suppose anyone has had any experience of this? Thanks
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Old Dec 24th 2015, 3:33 pm
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Default Re: Tax implications?

Huge thank you for the replies.

We are in a very fortunate position that we have no debt in the UK apart from our mortgage (which isn't massive either as we purchased when we were young before the house prices went up) so all money is going to be put towards paying that off and saving for boys future (and a few nice holidays as well!).

He works very long hours already when he is in the UK including a 2 hour commute each way so on a day to day basis our life isn't going to be massively different.
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Old Dec 24th 2015, 6:35 pm
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Default Re: Tax implications?

As a bonus, you will still be eligible for full Child Benefit for the boys, since your hubby's earnings are not classed as "Relevant UK Earnings".
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Old Dec 25th 2015, 12:03 pm
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Default Re: Tax implications?

Lol...yep I figured that out the other day! We can't claim at the moment as his earnings are over the threshold so when I called to enquire she said it would be best to start claiming from April and the start of the new tax year?

My conscious is telling me not to claim it as we don't need it but my head is saying why shouldn't we get something if we are entitled to it!
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Old Dec 25th 2015, 2:55 pm
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Default Re: Tax implications?

Originally Posted by stayingbehind View Post
Lol...yep I figured that out the other day! We can't claim at the moment as his earnings are over the threshold so when I called to enquire she said it would be best to start claiming from April and the start of the new tax year?

My conscious is telling me not to claim it as we don't need it but my head is saying why shouldn't we get something if we are entitled to it!
You could claim CB this year as well, if your hubby invests enough of his earnings in a company and/ or private pension to bring his taxable income below £50k. Better still, invest in a private pension to bring his taxable earnings below £43k (the current 40% tax threshold), so he'd pay no more than 20% basic rate tax and you'd receive full CB. It's a no-brainer (66% instant return on your investment, plus full CB), and you can access the private pension at age 55 (25% tax free and the rest at your marginal tax rate, probably 20%).
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Old Dec 27th 2015, 2:52 am
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Default Re: Tax implications?

Originally Posted by Rere View Post
it all being done online now??
not if you're non-resident for tax purposes. You still have to fill in a paper return AFAIK. Make sure you tick the box that says you still want to claim your UK allowance though! I forget that every year
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Old Dec 27th 2015, 9:19 am
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Default Re: Tax implications?

Do be wary where you take your advice from. Most people here are not tax experts.

Connecting factors are relevant but provided your husband keeps his days in the UK below the relevant limit he can still receive overseas earnings without liability to tax provided he remains UK non-resident tax purposes for long enough.

This explains how the Statutory Residency Test works. Information on the new UK Statutory Residency Test | Financial Planning in the UAE

Note that residency and domicile are entirely different legal concepts. His domicile will not change even if he is deemed UK non-resident.

A P85 is the form that should be completed and sent to HMRC. It's not mandatory but clarifies the situation.
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