Dolphin_court

I have been working and living in Saudi Arabia for 14 years. Now I am going to move back to UK (I am a UK citizen). Any suggestions on precautions should I take to avoid tax on my income from abroad? Any useful government website?

Thanks.

Pulaski

Do you mean "income from abroad", or do you really mean "savings accumulated from the income earned while I was abroad"?

You cannot avoid income on the former, but there may be ways to mitigate taxes on the latter.

durham_lad

What type of foreign income are you talking about after you arrive back in the UK?

For example I am married so we split up our income as best we could before we moved to maximize our tax free brackets. (HMRC taxes individuals, not couples). We also have dividends and capital gains from foreign invest funds so I made sure we moved those funds to “HMRC Reporting Funds” to get the much lower tax treatment.

Dolphin_court

Dear Pulaski,
I mean my salary from my abroad employment (a Saudi company) when I live and work in Saudi before I come back to UK.

durham_lad

I believe you will only be taxed on income that you earn from the day you become tax resident in the UK. Income prior to that is not counted, at least it wasn’t when I returned. For example I arrived May 5th and none of my income prior to that date was counted.

dean350

The main things you need to do are investigate 'split year treatment' which means that if you arrive in UK part way through a tax year you wont pay any income tax on income you earned that tax year in Saudi. The second thing is to look to sell any shares you own before you leave Saudi and rebuy them just after arrival in UK. This is to wipe clean any potential capital gains liability if you decide to sell shares in the future.

ianandhelena

Did you request split year treatment for the year that you arrived back in the UK?

durham_lad

Yes, we certainly did.

Dolphin_court

Thanks for the information

Dolphin_court

Thank you for the valuable advice

ianandhelena

We'll be doing this next year.
Was it as straightforward as just filling in the SA109 form, or did HMRC come back with followup questions?

durham_lad

We had a tax preparer do it for us and she did complete SA109. We had no follow up questions from HMRC.

We continue to treat the US calendar tax year as coterminous with the UK tax year which means we can simply use the 1099s we receive as-is, with no need for a separate tracking of income or taxes paid April-April


in Section 19 of SA100 the following comment was made.

”My wife and I returned to the UK on 8 May 2016, having lived in the USA since 1987. We are claiming split year residency in the UK for 2016/2017 under Case 8 as we started to have a home in the UK from 18 May 2016, would otherwise be UK resident for the entire tax year by virtue of our UK days, not ties, were non-resident in the UK in 2015/2016 and will be UK resident for 2017/2018. As such, this tax return declares non-UK income and gains received between 8 May 2016 and 31 December 2016 only with the 2016 calendar year being regarded as co-terminus with the 2016/2017 UK tax year since all income will be declared year on year and this method makes the foreign tax credit computation more accurate with UK taxes credited on the US Return in respect of doubly taxed income only.”

ianandhelena

Thanks for the info. We aren't in the US though.

durham_lad

Then you won’t have to worry about lining up the tax years after your first year back if you don’t have foreign income. If you do have foreign income continuing after you are back in the UK then you probably won’t need to file taxes in 2 countries either so life becomes simple.