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Where Taxpayers and Advisers Meet

Tax Implication for New Expat

dlynx
Posts:2
Joined:Thu Apr 28, 2022 1:56 pm
Tax Implication for New Expat

Postby dlynx » Thu Apr 28, 2022 3:54 pm

Hi Folks,

I am hoping someone can help me clarify a few things in relation to working abroad, as I am now away from the UK as expat for the first time.

So the international company I work for in the UK transferred me to a new assignment abroad from December 2021. Although my family still live in (property bought in my name) the UK, I am considered (by contract) to be resident in the host country where I am registered for tax and provided accommodation by the Company. Between Dec 2021 (when I started new assignment) and 5th April 2022 (end of 2021/22 tax year), I visited my family and spent 19 days in the UK. From 6th April 2022 - 5th April 2023, I plan to spend less than 90days in the UK.

Here are my questions:

1. Will I be considered UK resident for the full 2021/22 tax year or just a part (limited by new assignment from Dec 2021)?
2. Will the income I earned abroad between Dec 2021 - 5th April 2022 be subject to UK tax?
3. Given my family situation (they all still live in the UK) and the plan I have to visit them for less than 90days in 2022/23 tax year and beyond, will this arrangement sufficiently qualify me as non-UK resident in current tax year and beyond?
4. My Company paid (pro-rata) bonus for Jan-Nov 2021 activities at the end of April 2022; obviously net of PAYE tax deducted at payroll. Would this payment have any bearing on my ability to be considered non-UK tax resident for the the whole of 2022/23 tax year?
5. We (my family) plan to move up the property ladder later this year; preferred plan is to sell our current family home/property and then purchase another, with the alternative being to do a part exchange. What are the pros and cons of either? In addition, is this transaction likely to bring me into the UK tax net even though I will not be in the UK for up to 90days in the current tax year? Would it matter if the property is purchased solely in my name, in my spouse's name or both our names?

Would appreciate your thoughts and advice, good people. :)

Thanks.

AGoodman
Posts:1458
Joined:Fri May 16, 2014 3:47 pm

Re: Tax Implication for New Expat

Postby AGoodman » Wed May 04, 2022 12:34 pm

This is far from straightforward and, unless a contributor here does a lot of this work, or has time on their hands, I suspect would require some detailed analysis. Suffice to say it is likely that you will be UK resident for at least part of the time, 90 days is unlikely to be a key test, and you will be relying on double taxation agreements between the UK and your host country.

You really need some proper advice - it would be worth seeing if your employer would provide it - particularly as they will need it themselves to operate PAYE.

dlynx
Posts:2
Joined:Thu Apr 28, 2022 1:56 pm

Re: Tax Implication for New Expat

Postby dlynx » Wed May 04, 2022 10:25 pm

Thanks @AGoodman for the feedback.

At the onset of expatriation last year, my employer's Tax Consultants had mentioned that I would have no problem (from 2022/23 tax year) so long I respect the 90day rule. However, for the 2021/22 tax year, they mentioned that tax will be apportioned- due to the UK only up to start of expatriation. One other thing to mention is that there is double tax treaty between the UK and my host country.

I will go back to check with the Tax Consultants, however I still welcome more insights. :)

etf
Posts:854
Joined:Mon Nov 02, 2009 5:25 pm

Re: Tax Implication for New Expat

Postby etf » Wed Jun 22, 2022 11:29 am

1. Will I be considered UK resident for the full 2021/22 tax year or just a part (limited by new assignment from Dec 2021)?

Yes, if present in the UK for 183 midnights during the tax year ended 5 April 2022.
2. Will the income I earned abroad between Dec 2021 - 5th April 2022 be subject to UK tax?

Review the split tax year provisions which potentially allow a tax year to be split into resident/non-resident periods. Cases 1 to 3 apply to leavers.

3. Given my family situation (they all still live in the UK) and the plan I have to visit them for less than 90days in 2022/23 tax year and beyond, will this arrangement sufficiently qualify me as non-UK resident in current tax year and beyond?

Review the 3rd automatic overseas test (full-time work overseas) to see if you qualify as non-UK resident under this test. Don't under-estimate the daily record keeping you will need to maintain to demonstrate you meet the necessary conditions....overseas work hours etc.

4. My Company paid (pro-rata) bonus for Jan-Nov 2021 activities at the end of April 2022; obviously net of PAYE tax deducted at payroll. Would this payment have any bearing on my ability to be considered non-UK tax resident for the the whole of 2022/23 tax year?
I don't believe it should affect you being potentially being able to satisfy the conditions of the 3rd automatic overseas test.


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