I worked part of last fiscal year in India. I was an employee of an Indian company. They paid me say US$700 per day. This was illustrated at say UD$200 basic salary, USD$300 expenses and US$200 hardship. Indian tax on this was say US$200. The Indian company paid this to the the Indian tax authorities and called it 'special allowance' or words to that effect. This left me with the US$700 out of which I had to pay all living expenses in India. Hotels wer approv UD$220 per day. I spent 186 days out of the UK during that fiscal year. The money I earned I remitted to the UK and paid all my expnses etc out of it.The question: Am I liable for any UK tax? If so, on what portion of the income?
Thank you for the question.
Duties performed wholly outside the UK.
You were not 'UK resident' as you were physically present in the UK for less than 183 days (179=365-186).
Therefore, generally you are not liable to UK tax on the income earned outside the UK - BUT SEE BELOW.
However, you are just on the boarder line, so you may wish to double check and re-count your no. of days counting the night in the UK as 1 day.
This is one major test for 'UK residency'. However, other surrounding evidence and facts should also be considered.
Also, MORE IMPORTANTLY, ordinarily you appeared to residing in the UK, and you left the UK for India for only a short period of time (less than a complete tax year), then returned to the UK.
This indicates, although you were in the UK for less than 183 days (slightly less), you would still be treated as 'UK resident' for UK tax purposes, unfortunately, and so liable to UK tax on your worldwide income including income from India.
However, any tax that was paid in India on your income can be deducted from the UK tax liability on that same income.
What proportion? - There is no such thing. All net income (converting into pounds) will be liable to UK tax with a credit for tax paid in India as mentioned above. That is, total income minus hotel, travel etc which were required for you to perform your duties there.
If (and only if) you were gone to India to work for an Indian employer for at least a complete tax year (6th April .......... to 5th April ............, not part of) under a full time contract of employment, the case would be different, that is, you won't be taxed in the UK in that case.
Please note this is a complex area of tax and therefore it is advisable to seek a professional accountant/tax adviser's service before making any decision as clearly there appears to be a large amount involved.
I trust the above helps.
I was in India between November 2010 and December 2011. However, I was only converted to be a 'local' hire from June 2011 (for their tax reasons). In all, between April 2011 and April 2012 I was out of UK for 186 midnights.
Does your original reply still stand especially the comment about 'uk resident'?
FYI I was out of UK 252 days in this period.
Thank you for your response.
No change in your UK tax position.
As I stated above, as you did not leave the UK under a full time contract of employment spanning at least a whole tax year, that is, 06/04/2011 to 05/04/2012 (tax year 2011/412), unfortunately your income will still be within charge to UK tax.
I trust the above clarifies.
Tax Consultant & Freelance Lecturer over 9 years experience