UK Income Tax

Old Feb 1st 2008, 1:48 pm
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Default UK Income Tax

I am worried now. my financial advisor has said that as I am starting in Dubai on 20th April (i.e. during the next tax year) I am classed as ordinarily resident in the UK and will be taxed on my Dubai income. As my wages are close to £71,000 per annum, the tax is going to be hefty..
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Old Feb 1st 2008, 2:10 pm
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Default Re: UK Income Tax

Originally Posted by angelynv View Post
I am worried now. my financial advisor has said that as I am starting in Dubai on 20th April (i.e. during the next tax year) I am classed as ordinarily resident in the UK and will be taxed on my Dubai income. As my wages are close to £71,000 per annum, the tax is going to be hefty..
I think Meow can help you, but my instinct tells me that what matters is the date you leave the UK, not your starting date in your new job.

If you leave before Tax Day (5 April) you will be fine. What date do you finish your present job?

Alternatively, get your new employer to issue you with a first payslip simply showing that you have been paid an "April Salary". You can then convince the UK taxman that you started on April 1st.

The taxman won't check flight dates, so you can surely get round this.

The other other alternative is simply to stop working in the UK, and not tell the taxman anything about where you are going, or even working, at all, etc.
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Old Feb 1st 2008, 2:15 pm
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Default Re: UK Income Tax

Originally Posted by The Dean View Post
I think Meow can help you, but my instinct tells me that what matters is the date you leave the UK, not your starting date in your new job.

If you leave before Tax Day (5 April) you will be fine. What date do you finish your present job?

Alternatively, get your new employer to issue you with a first payslip simply showing that you have been paid an "April Salary". You can then convince the UK taxman that you started on April 1st.

The taxman won't check flight dates, so you can surely get round this.

The other other alternative is simply to stop working in the UK, and not tell the taxman anything about where you are going, or even working, at all, etc.
thanks TD. I leave around the 14th April - not sorted yet but i am working in the UK up to the 9th april. im speaking with my employers too about an April salary type statement.
im thinking it may not be worth me coming to Dubai after all
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Old Feb 1st 2008, 2:20 pm
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Default Re: UK Income Tax

Originally Posted by angelynv View Post
thanks TD. I leave around the 14th April - not sorted yet but i am working in the UK up to the 9th april. im speaking with my employers too about an April salary type statement.
im thinking it may not be worth me coming to Dubai after all
Sorry if I may sound a bit thick.

Are you getting your salary paid in Dhirams (UAE Currency) in a UAE bank account or are you getting paid in UK meaning into your UK bank.

LK
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Old Feb 1st 2008, 2:24 pm
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Default Re: UK Income Tax

Originally Posted by angelynv View Post
thanks TD. I leave around the 14th April - not sorted yet but i am working in the UK up to the 9th april. im speaking with my employers too about an April salary type statement.
im thinking it may not be worth me coming to Dubai after all
Ask your present employer to find a way of stopping paying you prior to 5 April - maybe some sort of 'adjustment' to your March salary?

It really would be best if, say, 31 March was your last "working day" in the UK.

But don't let it put you off Dubai - in any event the taxman would take years chasing you for money...........
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Old Feb 1st 2008, 2:46 pm
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Default Re: UK Income Tax

Originally Posted by LeicesterKid View Post
Sorry if I may sound a bit thick.

Are you getting your salary paid in Dhirams (UAE Currency) in a UAE bank account or are you getting paid in UK meaning into your UK bank.

LK
getting paid in dirhams, i have to designate a bank account. i obvioualy at the mo only have uk accounts and presumably cant set up a dubai one until i have residence visa
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Old Feb 1st 2008, 2:51 pm
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Default Re: UK Income Tax

I really dont see a problem here.

If you getting paid in DHS in a UAE account, the UK Tax man cannot do anything unless you bring money back to UK.

LK
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Old Feb 1st 2008, 2:53 pm
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Default Re: UK Income Tax

Originally Posted by angelynv View Post
getting paid in dirhams, i have to designate a bank account. i obvioualy at the mo only have uk accounts and presumably cant set up a dubai one until i have residence visa
In any case, you should have a UK-offshore account to send savings back to. Jersey or Guernsey used to be the favourites, but Isle of Man is also popular nowadays.

Do NOT save money locally in Dubai - spend what you need and get the rest transferred out.
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Old Feb 1st 2008, 2:58 pm
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Default Re: UK Income Tax

From my conversation with HM Revenue & Customs, it doesn't matter if you are leaving after the tax year has started. As long as you fill in the appropriate form to advise the HMRC that you are leaving, they cannot charge you tax on income earned abroad once you are classified as non-resident. The reason they want to know whether you left after the tax year started is so that they can reimburse any tax which you shouldn't have paid.

You should call HMRC and speak to their advisors. They are actually very helpful and best of all they won't charge you a penny unlike your financial advisor.
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Old Feb 1st 2008, 3:20 pm
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Default Re: UK Income Tax

Originally Posted by t19hlr View Post
From my conversation with HM Revenue & Customs, it doesn't matter if you are leaving after the tax year has started. As long as you fill in the appropriate form to advise the HMRC that you are leaving, they cannot charge you tax on income earned abroad once you are classified as non-resident. The reason they want to know whether you left after the tax year started is so that they can reimburse any tax which you shouldn't have paid.

You should call HMRC and speak to their advisors. They are actually very helpful and best of all they won't charge you a penny unlike your financial advisor.
thanks t19hlr, I did speak to the HMRC helpline and they told me I need to get out of the UK prior to April 5th, but i didnt feel comfortable with what that person was telling me as it differed from what i had read in their handbook (about a million pages long), but then their handbook seemed to say that any money earned wholly abroad would not be liable to UK tax.. its all very confusing
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Old Feb 1st 2008, 3:22 pm
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Default Re: UK Income Tax

Originally Posted by LeicesterKid View Post
I really dont see a problem here.

If you getting paid in DHS in a UAE account, the UK Tax man cannot do anything unless you bring money back to UK.

LK
yeah thats what i thought. this is what the IFA told me:
I hope this email finds you well.

I have spoken at length to our tax expert here and he has advised me that although he is not an expert in off shore taxation he has researched and spoken to tax specialists to provide you with an answer.

When you leave to work in Dubai you are no longer classed as an ordinary resident and providing that you live and work in Dubai for the full tax year and do not reside in the UK for more than 138 days you will not pay UK tax on any earnings or savings.

When you bring the savings you have accrued back to the UK no tax is charged, and you are able to do with it what you want to.

The only tax you may pay is on any capital which you decide to hold in a savings account for the time before you use it as a deposit.

I hope this makes sense, it is certainly good news.
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Old Feb 1st 2008, 3:44 pm
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Default Re: UK Income Tax

Aha........

...providing that you live and work in Dubai for the full tax year...
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Old Feb 1st 2008, 3:46 pm
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Default Re: UK Income Tax

What I mean is - as per my earlier post - find a way of "not earning" anything in the UK after 31 March..........

Can't you just leave on 31 March anyway? I'm sure 9 days of lost salary will not be a problem if it clearly makes you non-resident by 5 April.....
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Old Feb 2nd 2008, 2:59 am
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Default Re: UK Income Tax

Originally Posted by angelynv View Post
getting paid in dirhams, i have to designate a bank account. i obvioualy at the mo only have uk accounts and presumably cant set up a dubai one until i have residence visa
You can sent up an Emiratesbank account the day you land but won't be able to get a cheque book or debit/credit card until you have a visa.

Lloyds TSB in some cases will open you an account if your visa is already under process here and you can give 6months of bank statements from your UK bank.


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Old Feb 2nd 2008, 3:06 am
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Default Re: UK Income Tax

Originally Posted by angelynv View Post
yeah thats what i thought. this is what the IFA told me:
I hope this email finds you well.

I have spoken at length to our tax expert here and he has advised me that although he is not an expert in off shore taxation he has researched and spoken to tax specialists to provide you with an answer.

When you leave to work in Dubai you are no longer classed as an ordinary resident and providing that you live and work in Dubai for the full tax year and do not reside in the UK for more than 138 days you will not pay UK tax on any earnings or savings.

When you bring the savings you have accrued back to the UK no tax is charged, and you are able to do with it what you want to.

The only tax you may pay is on any capital which you decide to hold in a savings account for the time before you use it as a deposit.

I hope this makes sense, it is certainly good news.
I've double checked this and it's pretty much spot on...really all you need to know is that if you are going back to the UK for more than 6months in a year it's not worth you earning in Dubai.

Now I assume you are not going to be doing that as most employers do tend to notice absences of that length here and elsewhere...

You would probably do to speak to an IFA based in Dubai with several years experience rather than a UK IFA with no experience dealing with expats.

You can avoid tax pretty much altogether and greatly reduce any hit you may get going back if you get proper advice...

N.

UAE based IFA!
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