Working Offshore in Angola

[Les22]

I've been offered a job, working offshore in Angola 28 days on, 28 days off.

I will be working through a 3rd party contractor for an oil company, paying 17% tax to the Angolan government.

I'm assuming that if I spend my 28 days off in the UK, then I'd be liable for UK Income tax. I think I could get unilateral tax relief on the 17%, but I assume it would still mean that I pay 40% in total.

In my situation, should I seek to "live" outside of the UK and just travel to UK for holidays to see my family? (If so, any suggestions where?). I have 2 kids in UK, so I would want to see them when I could, but I'm divorced, so I don't have a home there as such.

I've been non-resident in UK (working and living in Singapore) since March 2013.

Any advice would be most appreciated.

[GlobalTaxAdviser]

Hi Les

It is very difficult based on the information provided if you are resident or not in the UK as it will depend on the statutory Overseas and Residence Test and then maybe the Sufficient Ties Test. Spending days in UK is only one criteria.

If you do not have a home in the UK and not actually working in the UK that will be in your favour. Most likely you will be non resident

If you are resident in UK then we will need to examine the double tax treaty between UK and Angola on double tax relief.

Kind Regards

Sash

[offshoreworker]

Les,

I believe you could easily qualify for the 3rd automatic overseas test and ultimately pay no tax.

Basically you would need to limit your days into the UK to 90.

[Les22]

Thanks for the replies.

I have not been resident in UK for the last 2 tax years (including this one). I have been living and working in Singapore.

But the job in Angola would start in June / July this year. I have to pay tax to the Angolan government on my earnings but I think I have a number of options:

- Live back in UK on my 28 days off and pay UK tax, in addition to tax in Angola, on my earnings in Angola.
- Stay over in SE Asia and travel to Angola on for my working rotation.
- Live closer to UK, but in a more favourable tax location.
- Rotate around different countries as a "tourist", and just pay tax in Angola.

Ideally, I would like to just have to pay the tax in Angola, but it seems that being officially resident in most countries requires you to pay income tax on foreign earnings.

I'm looking for the best option that would still allow me to travel to UK to see my kids on a reasonably regular basis.

Any suggestions on those options would be appreciated.

[offshoreworker]

Les,

You cant/wont pay tax in 2 countries. I would say your main problem is the fact that you and not your employer has to pay the Angola tax!

So basically if you are paying tax in Angola then the amount you pay there can be used to offset your UK liabilities. What percentage of tax will you have to pay in Angola?

If you are resigned to the fact that you will have to pay tax in Angola then i would not worry about returning to the UK for the whole of your 28 days leave because ultimately you will be paying zero to little UK tax depending on the amount of tax paid in Angola?

If you know the exact figures, both salary and % of tax to be paid in Angola it is very easy to calculate accurately the UK liability.

[Les22]

Thanks offshoreworker. But if I reside in UK during my 28 days off then I think I will have to pay tax in UK also, so I will be paying tax in 2 countries.

It's mandatory that I will have to pay 17% tax to the Angolan government. This will be deducted by my employer before they pay me.

Living in UK during my 28 days off will then mean I have to pay tax in the UK also. Although I will get relief on the 17% already paid, I will be in the 40% tax band for UK. So I think this means I will also have to pay the 23% to HMRC. Unless I'm misinterpreting the rules.

This is what I want to avoid. Any further thoughts or advice would be most appreciated.

[offshoreworker]

Okay 17% is not the end of the world?

Pay the 17% and then asuming you work 7 x 12 hours during your 28 days at work then qualifying for the 3rd automatic test is doable. This would allow you 2 weeks (more or less) out of your 4 in the UK.

Its a shame you have to pay the overseas taxes yourself as oposed to your employer paying them.

[Les22]

Indeed, thanks offshoreworker.

I could look at a tax haven such as Isle of Man, where top rate of tax is 20%, I think I'd get relief from the 17% paid to Angolan government, and IoM allowances seem quite good, so in effect I think I could live in IoM without any further income tax burden.

Attraction of IoM is that I am from Liverpool, so only a 30 minute flight to Liverpool by Easyjet to see my kids. I wouldn't be going to IoM for the weather!