Non uk resident - can I set up as sole trader in UK and tax implications

[ValerieC63]

My situation is as follows:
I worked for most of my life in the UK and paid tax via PAYE. In December 2019 I took early retirement from my NHS job so that I could move, with my husband to New Zealand In Feb 2020. He has a work to residence visa for 30 months and I have the same type of visa. I am now in receipt of my NHS pension which is paid into my UK bank account which I have kept open. We also receive a rental income from our house in the UK. I have decided that I would like to do some consultancy work for organisations in the UK. I have been approached by a couple of organisations in the UK and asked if I am interested in undertaking some consultancy work for them. I am an epidemiologist and would be analysing data and writing reports based on open source data. I would be able to undertake the work in New Zealand, as it can be done anywhere with internet access. There would be no requirement for travel to the UK. As I am planning to invoice in pounds sterling and ask for payment to be made to my UK bank account I am thinking that this means I need to register as a sole trader in the UK. Am I allowed to do this ? If so, do I need a UK address, and could I use my house in the UK as my business address, even though it is rented out? Please note that I have no intention of doing any consultancy work for NZ clients.

As I am not planning to spend any time in the UK in the 2020/21 tax year, other than perhaps a 2 week holiday, I assume i will be tax resident in New Zealand and that I will be taxed on my UK consultancy fees in New Zealand, rather than UK. Am I correct in this assumption ?

Any advice would be much appreciated.

Thanks

[hendersontax]

Hi
You would need to make a claim that your profits are not taxable in the UK on the basis of the UK/NZ double tax treaty. Similarly, your NHS pension should also not be taxed in the UK on the basis of the treaty, but you would need to make a claim to that effect. Your UK rental income will be taxable in the UK, however - and you will certainly need to file a UK Self Assessment tax return if you don't already do so. Happy to discuss this further with you if you would like.
Thanks
Tom

[bd6759]

The charge to tax in the UK is on residents of the UK and on trades carried on in the UK. The poster is neither, so there is no UK tax liability. The double taxation treaty is not in point in relation to the self employment. (If it were taxable in UK, then the DTA would over-rule it and give taxing rights to NZ).

The pension would be taxable in the UK but for the DTA which gives the taxing rights to NZ.

The property income is taxable in UK. Your UK agent will be required to deduct tax from the rent unless you have registered as a non resident landlord. Search NRL on gov.uk

[hendersontax]

It would be perfectly possible to be held to be 'trading in the UK' if contracts are concluded here notwithstanding the fact that the individual might carry out that work entirely overseas (see https://www.gov.uk/hmrc-internal-manuals/international-manual/intm262220). And if so, the income would technically be in scope of UK tax unless a claim is made under Article 8 of the treaty to exclude the profits from UK tax on the basis that there is no permanent establishment in the UK. Given that a Self Assessment return is required to be filed anyway, it'd be prudent to disclose the source of income and the basis on which it is not taxable in the UK.

[ValerieC63]

Hi Tom
Thanks for the advice. I am assuming that I will be a Transitional tax resident in New Zealand for 4 years and that this means that I will not be taxed on my NHS pension in NZ for the first 4 years. If this is the case, surely I must be required to pay tax on my pension income to HMRC ? As for UK income from self-employment / provision of consultancy services I’m not sure if this is exempt from NZ tax for transitional tax residents.