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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I understand that if i earn income - untaxed, in Saudi Arabia

Resolved Question:

I understand that if i earn income - untaxed, in Saudi Arabia -I will be liable to pay tax on it in the UK unless I am away for a tax year.
However if you apply the 183 day rule it means you have to be away for more than 182 days in the tax year?
Therefore can those 182 days count from, say Sept.1 to April 5 -in other words if my contract begins in September and I am not in the Uk, on leave for more than, say a couple of weeks - would I then be exempt from paying UK tax?
Submitted: 1 year ago.
Category: UK Tax
Expert:  taxadvisor.uk replied 1 year ago.

Hello, if you have any questions or need further clarification after reading my answer please let me know.

Thank you for your question...

 

Basically, you have to be out of the country for a full tax year to avoid paying UK income tax on your earnings abroad.

 

Sec 2.2 on page 6 of HMRC6 covers what determines UK residence for tax purposes.

 

If you leave the UK for full-time service under a contract of employment for at least

a complete UK tax year and any interim visits to the UK in the period do not amount to 183 days or more in any tax year or an average of 91 days or more in a tax year, you can apply for split year treatment under Extra -Statutory Concession A11. More information on this is covered under Sec 2.4 on page 8.

 

HMRC6 can be viewed here.

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

 

HMRC has revised rules on UK Residency effective from 6 Apr 2013. This is not law as yet..

 

Unless you meet one of the automatic overseas test you will be deemed resident in the UK for a tax year and all income arising worldwide would be chrageable to UK income tax.

 

More information on new rules can be found here

http://www.hmrc.gov.uk/international/rdr3.pdf

 

If you need more information please let me know before you rate my service.

 

I hope this is helpful and answers your question. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

 

I am available for any follow up questions you may have, and you can use the reply button to post your follow up questions to the page.

Customer: replied 1 year ago.

Thank you but it still seems somewhat ambiguous.


You have to be out of the UK for a tax year but can return for up to 183 days? Is that correct?


If so could those remaining 182 days not start or not be counted until september in the current tax year -through to April?


 


And/or would there be any gain in applying for split year treatment?

Expert:  taxadvisor.uk replied 1 year ago.
Philippa, thank you for your reply.

[Question]

You have to be out of the UK for a tax year but can return for up to 183 days? Is that correct?

 

[Answer]

Not quite ... You can also be resident in the UK if you are present here for fewer than

183 days in a tax year. This will depend on how often and how long you are here, the purpose and pattern of your presence and your connections to the UK.

If you are leaving the UK to work abroad full-time you will only become non resident from the day after the day of your departure, as long as

you are leaving to work abroad under a contract of employment for at least a whole tax year

• you have actually physically left the UK to begin your employment abroad and not, for example, to have a holiday until you begin your employment

• you will be absent from the UK for at least a whole tax year

• your visits to the UK after you have left to begin your overseas employment will

– total less than 183 days in any tax year, and

– average less than 91 days a tax year. This average is taken over the period of absence up to a maximum of four years.

Examples of this are covered under Sec 8.5 on pages 47-48.

With the changes introduced for Statutory Residency Test look at Third automatic overseas Test 1.5 on page 8 of RDR3. This is relevant to your scenario. It states

 

1.5 You work full-time overseas over the tax year, without any significant breaks during the tax year from overseas work, and:

you spend fewer than 91 days in the UK in the tax year,

the number of days in the tax year on which you work for more than three hours in the UK is less than 31.


Based on this you will not meet the automatic overseas test.

 

[Question]

If so could those remaining 182 days not start or not be counted until september in the current tax year -through to April?

 

[Answer]

If you are leaving for shorter period- say less than two full tax years, then the average number of days in the UK over rolling four years are considered.

Your visits to the UK after you have left to begin your overseas employment will

– total less than 183 days in any tax year, and

– average less than 91 days a tax year. This average is taken over the period of absence up to a maximum of four years.

[Question]

And/or would there be any gain in applying for split year treatment?

 

[Answer]

You would gain if you were leaving the UK for more than a full tax year . i.e out of the UK for the whole of tax year 2014-15 (6 Apr 2014 to 5 Apr 2015).

 

I hope this is helpful and answers your question. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

 

taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 3725
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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