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Hi, I moved to Singapore from the UK in September 2012 to

Hi, I moved to Singapore from...
Hi,
I moved to Singapore from the UK in September 2012 to take up a full-time employment contract, and will be unexpectedly returning in September 2013. This means that I will not have broken UK tax residency, and will owe UK tax on income earned in Singapore in tax years 2012/13 and 2013/14.
For tax year 2013/14, I would like to contribute to a SIPP to reduce my UK tax burden. HMRC's website says that tax relief can be achieved on an individual's UK relevant earnings - and I would like to be sure that my overseas employment income will qualify as UK relevant earnings. I will have been UK resident, and when I move back, my income earned in Singapore will be brought back into the UK net. Do you have any thoughts please? I would like to think that if HMRC can tax me on this earned income, then I should be able to use a SIPP for a more tax efficient outcome.
Thank you
Anthony
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Answered in 45 minutes by:
7/9/2013
TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience: Chartered Accountant >20 years + Qualified IFA
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MamaTax :

Hi Its MamaTax Here!

MamaTax :

Thanks for the question.

MamaTax :

Yes if you are considered UK Resident in the UK at some point in the current tax year then your contributions to SIPP are taken into account.

Customer:

Hi

Customer:

Thanks for getting back to me. Would my overseas employment earnings qualify as UK relevant earnings, thus allowing me to claim tax relief against SIPP contributions?

MamaTax :

However its also worth to consider if you can make use of new statutory residence test came into force on 6 April 2013 which are detailed HERE: http://www.out-law.com/en/topics/tax/tax-for-entrepreneurs/statutory-residence-test/

MamaTax :

Yes they will.

MamaTax :

What were doing overseas/ full time work?

Customer:

Yes, a full time employment contract with a company in Singapore. Because I was always UK resident before moving to Singapore, I'm pretty sure that I'd have to be outside the UK for a full tax year in order to become non UK tax resident in the relevant period. Hence my question re: the SIPP, as a way to reduce my tax liability if I return.

MamaTax :

The new rules don require you to be outside UK for a full tax year. However it appears you are to be resident but its worth looking at the link i provided.

MamaTax :

If you are UK tax resident, then then your worldwide income is taken into account in calculating UK taxes, and your pension contribution to a relevent fund/sipp is taken into account,.

MamaTax :

And the Relevant Earnings or Relevant UK Earnings wont be that relevent as everything is taxed in UK.

Customer:

OK, thanks. So in your opinion, earnings don't have to be UK earnings in order to be relevant?

MamaTax :

Yes. Once you are UK resident, your worldwide income is taxed in UK subject to any double tax credits that you can get.

Customer:

OK, thanks.

TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience: Chartered Accountant >20 years + Qualified IFA
Verified
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Category: UK Tax
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