Income tax for SA , uk resident

[pribhana@hotmail.com]

I am a South African coming over to work in the UK for the UK operation of an SA company.

1. I presume that I will be subject to UK tax laws and no longer have to pay tax under SA's resident-based taxation system?

2. Assuming I am subject to UK tax laws and I buy a flat to live in. Am I entitled to offset the mortgage interest payments against my personal income for tax purposes? If not, is there any other way that the purchase of a principal residence using a mortgage entitles you to tax relief?

3.

3.

[accountant@uktaxshop]

Re 1 the answer really depends on how long you are in the UK for. There are separate rules if you are here more permanently (over 2 years)

In general if you are in the UK for 183 days in a tax year, you will be subject to UK taxes. UK tax years run to the 5th April.

You may find you pay taxes in the UK (depending if you company is going to pay you in the UK or in SA) but are able to make a reclaim.

A typical scenario is as follows:

18 month contract, arriving in Jan 2004, leaving August 2006.

Jan 2004-April 2004 not tax resident. Can reclaim UK taxes paid
April 2004-April 2005. Tax Resident. Pay UK tax.
April 2005-August 2006. Not tax resident. Reclaim tax paid on departure.

Regarding SA taxes, I am not sure exactly what is due locally - it would be worth checking with an local advisor to see if and when you can stop paying. There is a double taxation treaty in place which should prevent you being taxed twice.

Re 2 - you cannot offset mortgage payments against income in this way - this only applies if you are renting out the property.

If you need some further help with planning your entry into the uk, the tax returns and administration, please let me know.

Regards

James Smith
Chartered Accountant

www.uktaxshop.co.uk
01284 764436