UK Income Tax

Old Feb 2nd 2008, 11:04 am
  #16  
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Default 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.
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Old Feb 2nd 2008, 11:15 am
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Default Re: UK Income Tax

Originally Posted by lionheart View Post
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
I don't think it's as simple as that. A friend of mine came to Dubai in the middle of the tax year in 2003, and was subsequently stung for tax on his earnings in Dubai for that part-year, even though he's still here.

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 information on the HMR&C website is a bit contradictory. One section says that in order not to be liable to income tax you simply need to leave the UK before the tax year begins and return after it ends (you're allowed that certain number of days back in the UK during that period of course), another section suggests that to be absolutely definitely 100% free of UK tax on your expat earnings you need to be permanently resident outside the UK for at least four or five years.

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 11:24 am.
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Old Feb 3rd 2008, 6:19 am
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Default 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.
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Old Feb 4th 2008, 9:58 am
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Default Re: UK Income Tax

Originally Posted by Meow View Post
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.
thanks meow, I did PM you. Yes it is all very clear now and I am negotiating with my cuurent employer to leave before the end of my notice period, so finish here on the 1st April and start at new place on the 5th APril, thereby if i come back 2009, i will ensure i come back after the 5th april 2009, ad ensure the amount of time spent in the UK is kept to a minimum.

thanks to everyone for their help x
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Old Feb 4th 2008, 10:54 am
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Default 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!
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Old Feb 4th 2008, 11:16 am
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Default Re: UK Income Tax

Originally Posted by Robbies View Post
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!
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!
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Old Feb 4th 2008, 11:33 am
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Default 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.
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Old Feb 4th 2008, 11:36 am
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Default Re: UK Income Tax

Originally Posted by Meow View Post
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.
oooppps just saw your post meow....90days is correct then. Thanks.
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Old Feb 4th 2008, 5:08 pm
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Default 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?
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Old Feb 4th 2008, 6:05 pm
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Default Re: UK Income Tax

Originally Posted by mccgirls View Post
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?
check customs web page accessed via HMRC website.. rental income will be taxed, transfer of money too although dont know for sure - i need to check this as hope to save something when out there - ill let you know
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Old Feb 4th 2008, 9:50 pm
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Default 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?
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Old Feb 4th 2008, 10:51 pm
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Default Re: UK Income Tax

Originally Posted by GarethR View Post
I don't think it's as simple as that. A friend of mine came to Dubai in the middle of the tax year in 2003, and was subsequently stung for tax on his earnings in Dubai for that part-year, even though he's still here.
Interesting.

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.
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Old Feb 5th 2008, 4:40 am
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Default 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!
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Old Feb 5th 2008, 1:53 pm
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Default Re: UK Income Tax

Originally Posted by t19hlr View Post
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.

............

This is incorrect. Just because you live outside of the UK does not mean that you are not subject to tax on overseas earnings. Most countries have their own version of income tax and will have a Dual Taxation agreement with the UK. The purpose of this is to ensure that you are not doubly taxed, but also to make sure that you pay the correct amount based on residency etc.

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.
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Old Feb 5th 2008, 2:12 pm
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Default Re: UK Income Tax

Originally Posted by Meow View Post
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.
There is no escape from rip off Britain even when you are abroad.
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.
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