Working Abroad

[The Runaway Found]

Hi all,

I've had a look for similar threads but none of those I found answer my issue directly, so I thought I'd ask.

I am British and work for a non-UK company in a country that does not have a taxation agreement with the UK. I have applied to be non-resident beginning with the forthcoming tax year and will not be spending more than ten days in the UK. My salary will be paid into a UK bank account and, other than share dividends (which I believe are taxed at source), I have no income in the UK at all.

Do I need to declare my income and pay income tax on it? I've been very confused by the HMRC website and a couple of articles I have read which seem to suggest that I should pay tax on all income until I have lived outside the UK for seven out fo ten years.

Can anybody help?

[etf]

Hi Runaway Found,

Provided the UK Tax Authorities accept you are not resident and not ordinarily resident (NR/NOR) for UK tax purposes, you should not be liable to UK tax on your employment income for duties you perform overseas. We presume you have already submitted a form P85 to notify the Revenue of your departure from the UK and you anticipate remaining in full-time employment overseas for a complete UK tax year (6 April to 5 April).

From a UK tax efficiency angle, you may like to consider opening a non-UK bank account e.g. Jersey, Guernsey or the Isle of Man into which you could pay your salary. In tax years throughout which you are NR/NOR this will preserve your UK personal allowance to offset against any UK source income which you might start to receive in the future e.g. letting income.

A non-UK interest bearing bank account can also offer a UK tax advanatage in the tax years of your initial departure and of your ultimate return, because by concession, the interest you receive in the non-resident period of these years will not be liable to UK tax. In contrast, any interest received from a UK account will be liable to UK tax in these tax years. Where a non-UK account is opened, it is usually closed just before the date of ultimate return to the UK to crystalise a final interest payment in the non-resident period.

Your UK dividend income should not create additional UK tax payments in tax years throughout which you are NR/NOR and therefore it is unlikely that the UK Tax Authorities will require annual tax return filings from you. We suggest you request confirmation of this point in writing from the Revenue.

We hope this helps.

etf

http://theexpatriatetaxfactory.com