Living and working abroad but paid in UK

by **MarkMurf** on Tue Jan 11, 2011 10:36 pm

Hello,

First visit here so please forgive me if what I'm asking is obvious to some..

I live and work in the Middle East but am paid in the UK by a UK-based company into my UK bank account. As a result, I'm obviously still paying tax and NI, despite not physically being in the country.

I cannot be paid locally unfortunately, so that isn't an option.

From my limited research, I can't see that I'd be able to make any sort of claim for a tax rebate (or similar). Could anyone advise on whether I'd have any grounds to claim something back?

Many thanks

by **Tugela** on Sat Jan 15, 2011 7:27 pm

Hi Mark. my husband is in the same position and this has been ongoing for 2 1/2 years now. He stopped paying NI via the company after being away for 1 year (we pay it ourself)
He has now had to submit self assessement tax forms which he did thru an accountancy company and he is owed over £25000 which i am told gets paid back to his employer.. why? this is his money in my eyes! I cant get answers to this. i did ask this on another tax site but unfortunately someone tried to paint him as a tax evader which he is not. A country he worked in for 2 years took tax off him at the same time as he was paying tax here......... i do hope you and i both get answers soon! Good luck!

by **dustydog** on Wed Jan 26, 2011 10:23 pm

To receive the money free of UK tax, you will need to establish non-residence in the UK. To be non-resident, you must be absent for at least one complete tax year. The tax year runs from 6 April to 5 April, so if you left the UK after 6/4/10, you will not properly establish non residence until you have been away for the whole of the 2011/12 tax year, ie 6/4/11 to 5/4/12.

If you expect to be away for this period or longer, you can be treated as non resident from the date of departure and claim "split year" treatment for that tax year.

Subjetct to HMRC approval, and assuming your employment services are performed abroad, you should be able to get an "NT" tax code for the salary paid in UK. This will mean that "No Tax" is deducted on your salary. If any tax has been deducteed during a period of non-residence, you should beable to secure a refund (subject to other liabilities with HMRC). Probably the best way to start contact with HMRC would be to complete a form P85, which you can find at the following address:

http://search2.hmrc.gov.uk/kbroker/hmrc/forms/viewform.jsp?formId=766

As per the other poster, national insurance contributions should cease after one calendar year.

I have no idea why the other respondent's tax refund will be going to their employer. If it was deducted from your salary and no special schemes are in place, this absolutely does not sound right.

by **stumc79** on Wed Mar 23, 2011 10:01 pm

Hello

Iam looking for information regarding moving abroad and living tax free.I currently work offshore in the UK sector of the North Sea on a platform.My pay is through the PAYE system.Iam looking to move to Spain and would like to know if iam able to get my tax back as i will only be in the country for 2 days a month maye 4 depending on flights.Iam a home owner here but there is still a mortage on it.I would just like to know it if qualify to claim anything back and what it involves.Thanks for any help.

by **Tugela** on Tue Jan 17, 2012 1:00 pm

my husband is in some agreement with the company he works for to do "tax equalisation" which i understand to be that he pays tax to the UK Government (he is a non resident) and at the end of the tax year the company gets his refund and then pays tax to the county he is working in - all this sounds ok but he has been in the UAE for the last 18 months so therefore no tax is due but he has just received his tax info from the accountants to say that his company is getting £14 000 plus refund from the tax office.
We dont understand this - surely he should get the refund as there is no tax due to the UAE.
Before this he worked in Romania where tax is lower - surely he should have got the difference paid back to him?
Can someone explain this is easy english please and thanks

by **etf** on Wed Jan 18, 2012 12:57 pm

Hi Tugela

The concept of tax equalisation is used by some employers (often large organisations) so that employees can move from one country to work in another with a guarantee that they will not pay more tax than they would have paid had they remained working in their home country.

Tax equalisation is a valuable benefit for an employee sent to work in a high tax country, but not so great for an employee like your husband who but for signing up to tax equalisation would have received a tax free income.

I guess the answer for your husband would be to seek a transfer to a very high tax country, so the pot of gold his employer has built up from pocketing his UK PAYE tax refunds is eroded by the higher taxes that the company would be responsible for paying on his behalf under tax equalisation.

I have seen some company tax equalisation policies that exclude employees assigned to the Middle East to avoid the issue you have described.

Kind Regards

etf

http://theexpatriatetaxfactory.com