Moving from UK to UAE - tax treatment of deferred compensation

[uk_expat]

Hi,

I am UK resident for the last number of years, I am discussing moving with my current employer from our UK office to our UAE office. I expect I will become non-UK resident and UAE resident on the date of moving under split year treatment.

I was awarded deferred compensation as part of a bonus scheme last year, which vests in March 2018. Under the terms of the bonus scheme I have no contractual right to payment unless I am still with my employer (whether working in UK or overseas) at the vesting date. Ordinarily, income tax and NI is payable under on the vesting date and is deducted through payroll. Assuming I am UK non-resident on the vesting date:

- Am I liable to UK income tax/NI on this income?
- I expect my payroll department will deduct income tax/NI by default. If I have no income tax liability, how do I go about claiming a refund from HMRC, and what documentation do I need to prove my non-residence status?

Many thanks,

uk_expat

[AmanSood]

Hi UK_expat

The deferred compensation will be sourced between the grant to vest period and split between the UK and Dubai. Only the % falling within the UK should be taxed and subject to NIC via the payroll. If the full amount is taxed and subject to NIC then you would be able to claim back the tax but the NIC would be harder to reclaim from HMRC as this won't be refunded on the tax return.

There could be implications for your employer as well so worth ensuring they get this right.

Aman