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Answer 1

Answered in 50 minutes by:

8/11/2010

UK Tax Professional: Sam, Accountant replied 12 years ago

Sam, Accountant

Category: UK Tax

Satisfied Customers: 17,137

Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax

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Hi

Thanks for your question

As you have not been out of the UK for a complete tax year with this employment contract 15 Mar 2010 to 31 Mar 2011 - you are going to be treated as resident throughout in the UK and liable to UK tax on all income. (This contract needed to last until at least 06/04/2011)

And then within that full tax year - your visits back to the UK must not exceed an average of more than 90 days, when viewed over more than one tax year, or more than 182 days in any one tax year.

If you are charged tax in Singapore, then as we have a double taxation agreement with them - any tax you suffer there can be claimed as a credit against your UK tax liability - which will arise against the salary and apartment - as this is a benefit in kind, so will be liable to tax.

Plus the rental income that arises is liable (and remains liable) to UK tax - whether you are treated as resident or not resident.

But as things stand - your liability will remain in the UK fully -

You should have completed form P85 for the tax office when you left the UK - so that they could determine your residency and tax position with this work abroad.
If you have not completed this - I have added a link here -

You don not advise whether you continue to be paid from the UK - or whether paid in Singapore - but if you are paid from the UK - then they will charge tax through the PAYE system and advise the tax office of any company benefits - such as the apartment and transport allowance.

For UK tax purposes all income and benefits are added together
The first £6475 is paid free of tax (as long as total income plus benefits is less than £100,000) then the next £37400 is liable at 20% tax (I assume pension contributions will be taken prior to the taxing of your income) - then anything over and above £43875 is liable at 40% (up to the limit of £149,999 then 50% tax is due)

So if your salary car and bonus amount to £75641
Less Personal allowance 6475
Liable to tax 69166
37400 x 20% = £ 7480.00
31766 x 40% = £12706.40
Total tax due £ 20186.40

You do not advise if this takes into account the benefit of the apartment - (and does not take into account rental income arising in the UK) so the tax liability may be higher

Thanks

Sam

Answer 2

UK Tax Professional: Sam, Accountant replied 12 years ago

Hi

Thanks for you response

Its not enough that the contract be extended - it has to be for more than a full tax year - and written within a contract that the employment contract lasts beyond 06/04/2011

As you will be paid in the UK - your income will remXXXXX XXXXXable to UK tax unless your employment contract does indeed extend beyond 06/04/2012 - and you should still arrange to complete form P85 - for the tax office.

And whether the scheme will be of little benefit to you is all dependant on your residency staus outcome.

But if you stay as things are with a UK liability (as treated as residen) then you will continue to pay UK tax on your salary as it originates in the UK - and will only have a further liability on any benefits/payments made in SG - which may be subject to average of 8% - which you can claim credit for (but will still have to pay the difference to bring this up to the UK tax liability due)

If, however you do have an employment contract that lasts beyond 06/04/2011 - then you will be treated as not resident in the UK - will be able to get your income tax free (although Class 1 national Insurance will still be deducted for the first 52 weeks) and then have a full tax liability in SG - which has the preferential charge!

So my advise is this - you stay resident - then the tax equalisation scheme will not make you worse off - but if you are to be treated as not resident - it clearly will!

Thanks

Sam

Answer 3

UK Tax Professional: Sam, Accountant replied 12 years ago

Hi

Thanks for your further response

No - tax windfalls are normally too good to be true - as they are!

For there to be a continuity of time between the contract with Singapore and the contract with Hong Kong - you need to ensure there is no gap between the contracts - so one finishes in SG one day and the next starts in HK the next day.

However HMRC cannot, in advance of this award you non residency status unless the first DG contract does in fact extend beyond 06/04/2011 in the first instance.

If you are awarded non residency status due to the first SG contract being treated as you being resident, then you will be able to reapply with the HK contract and ask for 2010/2011 to be relooked at - but - the likelihood is that it will not result in a tax refund - a the SG contract itself was not beyond a full tax year in its own right.
And you will only be treated as not resident from the start of the HK contract

So
1) get that contract with SG reworked to state from 15/03/2010 to at least 06/04/2011
2) Fill in P85 when this new contract date has been agreed
3) Make sure that the SG contract finishes one day and the HK contract starts the next
4) Re advise HMRC when the HK contract starts
5) make sure you spend no more than 90 days in the UK for any one tax year

On another note - if you are able to get the initial treatment of non residency agreed with HMRC - then you may be eligible for the non residents landlord scheme - which allows you just to pay tax on the rental income at the end of the tax year - instead of having to arrange a tenant or manging agent to pay the tax over monthly - see link here

However if you are going to be treated as resident - then the rental income will be taxed at the end of the year anyway as you will complete a self assessment form with employment page and rental income page.

Thanks

Sam

I am enlisting your advice on my potential/current tax situation.

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