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Where Taxpayers and Advisers Meet

Need help with foreign tax

DrTails
Posts:2
Joined:Thu Jun 04, 2020 10:12 am
Need help with foreign tax

Postby DrTails » Thu Jun 04, 2020 10:18 am

I am a UK resident running a web hosting business, I have done so for a few years and I am starting to accept customers worldwide. All my income was originally from UK residents where card and PayPal payments would all come from the UK. Now I am starting to get customers from all over the world.

Ultimately all income is going directly to my UK PayPal and UK bank, and both merchants use currency conversions to have all my income into GBP. I don't have any assets, properties or residency in any other country apart from the UK.

Does any of this come under 'foreign income' and should I be declaring it as such? I've read up about it for a long while and from my understanding it only seems to be relevant to people that have assets, bank accounts or some form of residency in foreign countries, so I just need a little clarification to help me clear this up.

Any help is greatly appreciated!

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Need help with foreign tax

Postby AGoodman » Thu Jun 04, 2020 2:37 pm

Not an area of expertise but I'm fairly confident that this is UK income because it derives from your UK trade (i.e. you run your business here).

The trickier aspect is knowing whether you could have any foreign tax liability under assorted foreign anti-avoidance provisions introduced to counter the likes of Amazon. I doubt it - partly because these are only targeted at larger businesses - but you'll need somebody more knowledgeable than me.

DrTails
Posts:2
Joined:Thu Jun 04, 2020 10:12 am

Re: Need help with foreign tax

Postby DrTails » Thu Jun 04, 2020 3:00 pm

Not an area of expertise but I'm fairly confident that this is UK income because it derives from your UK trade (i.e. you run your business here).

The trickier aspect is knowing whether you could have any foreign tax liability under assorted foreign anti-avoidance provisions introduced to counter the likes of Amazon. I doubt it - partly because these are only targeted at larger businesses - but you'll need somebody more knowledgeable than me.
Hi AGoodman, thanks for your reply! I will await someone else's response :)

I am quite certain I am doing it right as HMRC forums suggest that 'The Foreign page is not applicable as no foreign tax deducted and you are not claiming foreign tax credit relief.' Source: https://community.hmrc.gov.uk/forums/customerforums/sa/0e3b4b09-cb3c-ea11-8454-00155d3bd04f

I believe the foreign income is merely for taxpayers that have income in different countries, not in the way I am thinking of (which is income from clients in other countries). There is also someone else on the same forum with a very similar question to mine and shows the same answer: https://community.hmrc.gov.uk/forums/customerforums/kytr/707c0b30-7ecd-e911-b3b9-00155d9c6b78

I look forward to a clarification from someone that has the expertise in such.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Need help with foreign tax

Postby maths » Thu Jun 04, 2020 3:52 pm

It is highly unlikely that your trading income for UK tax purposes would be categorised as "foreign source" income. As AGoodman states it is simply part of your UK trade with a UK source.

Sometimes under domestic tax provisions of foreign countries a local withholding tax is levied where payments are made to non-residents of that country (eg payments to the UK) normally re interest, royalty etc payments but possibly even if such income is in fact trading income. Such taxes are often levied initially irrespective of the terms of a relevant double tax agreement (DTA) in which case it would then be up to you to lodge with the foreign country a reclaim form if a relevant DTA was in point.

In any event as your income from outside the UK is part of your trading income even if a foreign tax is levied you would claim foreign tax credit relief on the Self-employment Supplementary Pages of your tax return not on the ‘Foreign’ pages.

Just for clarification, I am not suggesting by responding that I am more knowledgeable than AGoodman............ well maybe.........??? !!

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Need help with foreign tax

Postby bd6759 » Thu Jun 04, 2020 5:19 pm

Clearly a UK sourced trade, and all income goes on self-employment pages.

It is very likely that a DTA would give taxing rights to the UK, so there would be no need for FTCR.

If there were a claim for FTCR it would have to on the foreign pages.


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