Working abroad and UK tax

[help.ma.boab]

Hi all

does anyone have a link to a fact sheet to help people working for a UK company but the job is based overseas? I get asked occasionally but have never really dealt with it as i deal mostly with subbies in the CIS scheme.

The usual scenario is they get paid say £40k in the UK suffering about £7k in tax and then they want to reclaim it as they have been in the UK for only 1 month in the year. I would have thought that the companys payroll dept deal with that but they said it isnt the case. what confuses me even more is that on the form R85 it says if you are still employed it will be dealt with through your companys HMRC office.

can anyone help?

[lsp54]

I am looking at this issue myself and wondered if anyone had practical experience. A client of mine has become non-resident, working for a UK company in Vietnam for 3 years. IR 20 says that if you are non-resident and carry out all of your employment duties overseas, even for a UK employer, then you are not liable to UK tax. I suppose this means remittance basis becomes irrelevant, and it doesn't matter where the money is?

You haven't made it clear if your client is technically non-resident. Is he UK domiciled?
Regards

[rossmcv]

Hi isp54

thanks for the response, the client basically was born in the UK & has a house in the uk but only comes back to country for about 80 days per year.
Is the remittance basis paying the £30k or your income only becoming taxable when used in this country? im a bit confused with all the different rules

Thanks

[Ian Wright]

Hi Guys,

I act for a great many expats and non doms and deal with personal international tax matters in my general duties.

IR20 was abolished as from 6 April 2009 and you should refer to HMRC6.

Remittance basis is really an issue for non doms or those uk domiciled but not ordinarily resident but in both cases resident in the UK.

I beleive you are dealing with a non resdience issue and therfore you should be applying for an NT (no tax) code for the taxpayer as they are non uk resident. You have to be careful though because they will have to be out of the UK for at least one whole tax year. Worst case scenaruio is if a client starts working abroad on 10 April 2010 and returns to the Uk on say 1 April 2012. Even though he has been out for nearly two years he has not been out for a complete tax year 6 April to 5 April.

You should also be filing in form P85 advising HMRC of a taxpayers departure from the UK. As well as being out for at least one whole tax year there is also the issue of whether they are resident or not based on the 183 day rule and the 90 day rule. You would also need to look at a split year claim when the client leaves the UK thus splitting his residence between the UK and the new country of residence.

One last issue although not a matter for you is the client could be resident in another country and have to pay tax there. Warnings of this should be put to the client and his employer.

I hope this helps.

Ian

[help.ma.boab]

Thanks Ian

that was a helpful response

Regards

help ma boab