Working abroad when resident in the UK

[Andrew Pearse]

i would like to know what are the Income tax consequences are, when working abroad, if non-residency is unlikely e.g., returning for more than 91 days/year, or working abroad for less than a year.

The particular situation I am researching is:
Tax Year 2009-10 :
Worked in UK until summer 2009 - some Income Tax paid under PAYE
Worked abroad (outside EU) for remainder of Tax Year, paying local Taxes.
Expect to return soon to the UK

i know should complete a form P85, but before doing so, want to know the likely consequences:
Will any UK Tax be payable on overseas income?
Can get a refund of UK Tax already paid ? (overpaid, under PAYE, if that was treated as the only Income for the whole year.)

[etf]

Hi Andrew,

If you remain resident and ordinarily resident for UK tax purposes, the likelihood is that you will have to pay UK tax on your worldwide income, but claim a credit for overseas tax against your UK tax liabilty (but see below).

Where the same income (in your case employment income) is liable to tax in more than one country, relief for the double tax will be given either under the provisions of a double tax treaty or unilaterally.

You will need to check whether a double tax treaty exists between the UK and the country where you have been working. If a treaty does exist, you will need to establish whether the treaty specifies that double taxation is eliminated through exemption of your income. Where the exemption method is not detailed in the treaty, your income will be charged to UK tax, but a credit will be given for the lower of the overseas tax and the UK tax.

If a treaty does not exist, unilateral relief can be claimed against the UK tax at the lower of the overseas tax and the UK tax.

We hope this helps as a starting point for you.

etf

http://theexpatriatetaxfactory.com

[Andrew Pearse]

Thanks for the nod - i will investigate double-taxation for Switzerland, but think it is highly likely to have an agreement.
i suspect UK tax rates may be higher than theirs - so some additional tax may be payable