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Hello, if you have any questions or need further clarification after reading my answer please let me know.
Please advise -
Are you UK resident for tax purposes?
Do you file a tax return at present?
I am a UK resident and prsenlty do file tax returns. The role is 28 days on 28 days off so I will be back in the UK every other month for apprx 26 days.
Jason, thank you for your prompt reply.
As UK resident for tax purposes, your worldwide income is chargeable to UK tax.
yes, you would be liable to income tax on your foreign earnings.
There is a double tax agreement between UK and China.
You would claim relief against UK tax for foreign tax paid on your earnings in China.
More information on this can be found in Sec 9.2 on Page 53 of HMRC6 here
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The agency who I'm working pay me USD1386 a day and I actually my net amount that I receive is 850USD. Does this mean that I will also have to pay tax on the USD850 in the UK. Then when I file my tax return I can state that I have paid tax to China and then will not need to pay any additional tax at the end of year to the UK.
Jason, thank you for your reply.
You will show your gross earnings (based on USD1,386 a day) when filing your tax return. You will also complete supplementary pages SA 106 - Foreign and claim for foreign tax credit relief. Your UK tax will be calculated using your gross pay and not net pay.
You can find out more on SA106 - Foreign here
Ok so each month in theory the net amount I receive is after UK tax once I've declared it at then end of the tax year and the money I've paid in China tax should cover my UK tax payment once I've declared my earnings and tax payments in China. Sorry to be a pain but its my first overseas assignment and I wan tot be sure its worth the move
Jason, thank for your reply...
Lets suppose your earnings (all from job in China) after personal allowance of £9,440 give rise to UK tax of £8,000. You have paid foreign tax of say £6,000 on these earnings.
In this scenario you will have to pay an additional sum of £2,000 to UK tax authorities.