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Where Taxpayers and Advisers Meet

declaring foreign (australian) income + FBT on UK tax return

mgp4
Posts:5
Joined:Mon Jan 09, 2017 6:26 pm
declaring foreign (australian) income + FBT on UK tax return

Postby mgp4 » Tue Jan 10, 2017 11:30 am

I initially posted this in the income tax board, but haven't had any replies and having had a look I thought it might be better suited to the international tax board. I am hoping someone can help me with this as I am confused and stressed out about the likely huge tax bill I'm about to get!

I worked in a salaried full time job in Australia from Aug 2015 to August 2016 in the public sector. Prior and since these dates I have been living and working in a salaried full time job in the UK.

I did not realise that I would still be counted as UK resident for the entire of the 2015/16 tax year despite being in Australia for 8 months but understand that this is now the case, and I am not entitled to split year treatment as I have not been abroad for a full UK tax year. So, I need to declare my foreign income on my UK tax return and will be taxed in full on this minus any tax credit given for tax already paid in Australia (as this was deducted PAYE much like here).

Whilst I was in Australia I took advantage of a public sector scheme known as salary sacrifice where a proportion of your income is deducted prior to tax for rent/mortgage payments, and other allowable goods such as a laptop, and for meals and entertainment. On my end of year tax summary from Australia there are 3 figures - 1) Total tax witheld, 2) Gross payments, 3) Reportable fringe benefit amount.

The gross payments do not include the income that was deducted from my salary via the salary sacrifice scheme, although these deductions are detailed on my pay slips, and my year to date gross income on my payslips include the value of these deductions. Consequently, the year to date gross income on my last payslip of the Australian tax year, was significantly higher than the gross payments detailed on my Australian tax summary.

The tax year in Australia runs from 1st July - 30th June.

So what I was wondering is:

When declaring my foreign australian income on my UK tax return:

1) Can I declare the income as detailed on my australian tax summary or do I have to declare my income including the income that was deducted as salary sacrifice?
2) If I declare the income as detailed on my australian tax summary, how do I calculate this to fit with the UK tax year of 6th Apr - 5th Apr?
3) If I declare the income as detailed on my australian tax summary, do I need to declare the fringe benefits amount and and what should this be declared as on a UK tax return?

Thanks in advance for any help and advice with this.

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: declaring foreign (australian) income + FBT on UK tax return

Postby AmanSood » Sun Jan 29, 2017 9:27 pm

Hi mgp4

In response to your queries


1) Can I declare the income as detailed on my australian tax summary or do I have to declare my income including the income that was deducted as salary sacrifice? Salary sacrifice is normally viewed as being effective in the UK. It is worth making sure that the salary sacrifice has been set up correctly to ensure no risk of challenge by HMRC.
2) If I declare the income as detailed on my australian tax summary, how do I calculate this to fit with the UK tax year of 6th Apr - 5th Apr? although the UK and Australian tax years are not aligned, hmrc are normally fine with treating them aligned.
3) If I declare the income as detailed on my australian tax summary, do I need to declare the fringe benefits amount and and what should this be declared as on a UK tax return? The fringe benefits only need to be declared if these are taxable under UK tax legislation.

Above all, please note that even if you are considered UK tax resident, you may be non-resident under the treaty so there may be no need to declare your overseas employment income in the UK. I would advise getting a professional tax advisor to assist you.

Aman
Tax Advisor
www.e-taxconsulting.com
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155


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