UK Income Tax
#16
Account Closed
Joined: Jul 2007
Posts: 7,028
Re: UK Income Tax
Personally I don't see the relevence of your departure date. What you earn in the UK will be taxed but thereafter you will presumably become a UAE evident and not liable for UK tax unless you spend 138 days or whatever back home. Mind you, I thought there was also some other regulation giving you completely tax-free status overseas only if you spend five years away. Not sure if that still applies but I believe that expats returning early may be liable to some tax on their overseas earnings, but not sure how much.
#17
Soupy twist
Joined: Dec 2004
Posts: 2,271
Re: UK Income Tax
Mind you, I thought there was also some other regulation giving you completely tax-free status overseas only if you spend five years away
The implication seems to be that in order to be tax-exempt, you need to show "commitment" to living abroad, and one year isn't long enough for that.
EDIT - here's the exact quote about the importance of being out of the UK for a full tax year:
"2.2 If you leave the UK to work full-time abroad under a contract of employment, you are treated as not resident and not ordinarily resident if you meet all the following conditions
your absence from the UK and your employment abroad both last for at least a whole tax year
during your absence any visits you make to the UK
- total less than 183 days in any tax year, and
- average less than 91 days a tax year."
Also :
"2.8 If you claim that you are no longer resident and ordinarily resident, we may ask you to give some evidence that you have left the UK permanently, or to live outside the UK for three years or more... This evidence might be, for example, that you have taken steps to acquire accommodation abroad to live in as a permanent home, and if you continue to have property in the UK for your use, the reason is consistent with your stated aim of living abroad permanently or for three years or more. If you have left the UK permanently or for at least three years, you will be treated as not resident and not ordinarily resident from the day after the date of your departure providing
your absence from the UK has covered at least a whole tax year, and
your visits to the UK since leaving
- have totalled less than 183 days in any tax year, and
- have averaged less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years"
Last edited by Eeyore; Feb 2nd 2008 at 10:24 am.
#18
Re: UK Income Tax
The original poster may wish to speak to an IFA who is authorised in both the UK and the UAE and thus fully understands the system. That'd be me then!
If the poster comes to the UAE in April, they shouldn't have a problem provided they remain UK non-resident for a full tax year. The few days that the start of the month will fall into their 90 day annual allowance (althoughthe six month rule also applies here) and provided they don't exceed that earnings in the UAE won't be subject to UK taxation.
It would also be sensible to have sent the relevant paperwork to HMRC before departure.
Feel free to PM me.
If the poster comes to the UAE in April, they shouldn't have a problem provided they remain UK non-resident for a full tax year. The few days that the start of the month will fall into their 90 day annual allowance (althoughthe six month rule also applies here) and provided they don't exceed that earnings in the UAE won't be subject to UK taxation.
It would also be sensible to have sent the relevant paperwork to HMRC before departure.
Feel free to PM me.
#19
Forum Regular
Thread Starter
Joined: Dec 2007
Posts: 158
Re: UK Income Tax
The original poster may wish to speak to an IFA who is authorised in both the UK and the UAE and thus fully understands the system. That'd be me then!
If the poster comes to the UAE in April, they shouldn't have a problem provided they remain UK non-resident for a full tax year. The few days that the start of the month will fall into their 90 day annual allowance (althoughthe six month rule also applies here) and provided they don't exceed that earnings in the UAE won't be subject to UK taxation.
It would also be sensible to have sent the relevant paperwork to HMRC before departure.
Feel free to PM me.
If the poster comes to the UAE in April, they shouldn't have a problem provided they remain UK non-resident for a full tax year. The few days that the start of the month will fall into their 90 day annual allowance (althoughthe six month rule also applies here) and provided they don't exceed that earnings in the UAE won't be subject to UK taxation.
It would also be sensible to have sent the relevant paperwork to HMRC before departure.
Feel free to PM me.
thanks to everyone for their help x
#20
Re: UK Income Tax
Informative thread - I thought it was as straight forward as earned abroad = not for UK taxation... how wrong I was!
Will keep this in the back of my mind for future reference!
Will keep this in the back of my mind for future reference!
#21
Forum Regular
Thread Starter
Joined: Dec 2007
Posts: 158
Re: UK Income Tax
well its certainly been a learning curve for me, its all about tax years 6th april to 5th april and being classed as non-resident otherwise ur taxed on your worldwide income!
#22
Forum Regular
Joined: Oct 2007
Posts: 44
Re: UK Income Tax
Not sure where your advisor is getting the information from. I have been told the following by both the HMRC and my accountant who has dealt with many tax issues for people abroad:
1. Once you leave the UK and declare yourself as a non-resident you do not have to pay any tax on income earned abroad
2. By filling out a form at your UK bank, any interest earned going forward will not be taxed (not 100% sure about this, there may be a smaller tax deduction than usual)
3. Over a period of 4 full tax years, you may only spend an average of 90days per year in the UK. If you spend more than this you will be liable to pay tax on all earnings anywhere in the world as your status changes from a non-resident to a ordinary resident.
The above information is based on my findings, so please confirm it with a qualified tax specialist. Norm_UK does it sound right to you? I myself will be moving to Bahrain in the next couple of months and am basing my tax exemptions on this information. I will call HMRC again to confirm this information and will let you know what they say.
1. Once you leave the UK and declare yourself as a non-resident you do not have to pay any tax on income earned abroad
2. By filling out a form at your UK bank, any interest earned going forward will not be taxed (not 100% sure about this, there may be a smaller tax deduction than usual)
3. Over a period of 4 full tax years, you may only spend an average of 90days per year in the UK. If you spend more than this you will be liable to pay tax on all earnings anywhere in the world as your status changes from a non-resident to a ordinary resident.
The above information is based on my findings, so please confirm it with a qualified tax specialist. Norm_UK does it sound right to you? I myself will be moving to Bahrain in the next couple of months and am basing my tax exemptions on this information. I will call HMRC again to confirm this information and will let you know what they say.
#23
Forum Regular
Joined: Oct 2007
Posts: 44
Re: UK Income Tax
The original poster may wish to speak to an IFA who is authorised in both the UK and the UAE and thus fully understands the system. That'd be me then!
If the poster comes to the UAE in April, they shouldn't have a problem provided they remain UK non-resident for a full tax year. The few days that the start of the month will fall into their 90 day annual allowance (althoughthe six month rule also applies here) and provided they don't exceed that earnings in the UAE won't be subject to UK taxation.
It would also be sensible to have sent the relevant paperwork to HMRC before departure.
Feel free to PM me.
If the poster comes to the UAE in April, they shouldn't have a problem provided they remain UK non-resident for a full tax year. The few days that the start of the month will fall into their 90 day annual allowance (althoughthe six month rule also applies here) and provided they don't exceed that earnings in the UAE won't be subject to UK taxation.
It would also be sensible to have sent the relevant paperwork to HMRC before departure.
Feel free to PM me.
#24
Just Joined
Joined: May 2007
Location: Birmingham UK
Posts: 23
Re: UK Income Tax
This is really interesting, I am looking at the moment at moving to Kuwait and have found this info very helpful. I would be renting my house out here and may need to transfer money back to my UK bank account to cover expenses here. Does anyone know if money transferred to the UK to cover these expenses would be taxed?
#25
Forum Regular
Thread Starter
Joined: Dec 2007
Posts: 158
Re: UK Income Tax
This is really interesting, I am looking at the moment at moving to Kuwait and have found this info very helpful. I would be renting my house out here and may need to transfer money back to my UK bank account to cover expenses here. Does anyone know if money transferred to the UK to cover these expenses would be taxed?
#26
Just Joined
Joined: May 2007
Location: Birmingham UK
Posts: 23
Re: UK Income Tax
Thanks angeylv, I will check out that web site, I think you only pay tax on any profits you make from renting out property.
I'm wondering if the rent does not cover all the Mortgage and other costs ie: property tax, insurances etc and I have to send money home to help cover these expesnses, would I pay tax on that?
I'm wondering if the rent does not cover all the Mortgage and other costs ie: property tax, insurances etc and I have to send money home to help cover these expesnses, would I pay tax on that?
#27
Joined: Jan 2008
Posts: 88
Re: UK Income Tax
How did the taxman get hold of your mate, I am assuming he told them he was staying in Dubai and gave them his address and told them how much he was earning.
Also what if you do not tell the taxman you are earning abroad? What he does not know does not hurt him. Keep your money in an offshore account.
#28
Re: UK Income Tax
Even if you are none resident any income earned in the UK, such as from a rental property or interest on savings is taxable IF it exceeds your annual allowances. However, various parts of rental income are tax deductible, such as mortgage interest, repairs and renewals and professional expenses. Basically you only pay tax on the "profit" if any. I've been renting out a property in the UK for 4 years and so far it has cost me about £20,000 but at least I haven't had to pay any tax on the rental income!
#29
Re: UK Income Tax
Not sure where your advisor is getting the information from. I have been told the following by both the HMRC and my accountant who has dealt with many tax issues for people abroad:
1. Once you leave the UK and declare yourself as a non-resident you do not have to pay any tax on income earned abroad
is based on my findings, so please confirm it with a qualified tax specialist.
............
1. Once you leave the UK and declare yourself as a non-resident you do not have to pay any tax on income earned abroad
is based on my findings, so please confirm it with a qualified tax specialist.
............
The situation if you move to country that does not have income tax, such as the UAE is different. Just 'declaring yourself non-resident' won't cut it either! Your UK tax liability on overseas earnings will depend on when during the tax year you moved overseas, i.e. the number of days resident in the UK. For example someone who moves to the UAE in November could well find themselves liable to UK tax until April 5th the following year, dependent on how long they remain non-resident.
Overseas income that is sent to the UK may also be liable for UK income tax, unless it is below the annual exemption (this applies even to non-residents and in the 2007/08 tax year is £5,225).
Border Reiver is correct in her comments regarding UK property & mortgages.
I'd also remind everyone that UK Nationals are subject to UK inheritance tax rules on death, no matter where they reside. This applies to total worldwide assets. And don't think that the UK government can't get information about your offshore accounts either.
Any other questions.
#30
Joined: Jan 2008
Posts: 88
Re: UK Income Tax
Tax, tax, tax till you die and after you die.
I would not be surprised if they introduce oxygen tax, a fixed amount of tax deducted from you earnings (in addition to NI and Income Tax) for anyone over 18 for breathing in the pure UK air. Sounds bonkers now, but who knows.