Residence status fiasco

[dynamicq]

Hello guys,

I am new here. Hold your throwing bricks

I am a pilot. I have lived and worked in UK since 2005 to 2018. I am a UK citizen. In 2018 I found a full time in Belgium. Worked there for a year. I didn't declare to HMRC I am living abroad now, and paying tax there. Propably should have. During the tax year of 2018, I did a few side jobs in UK. Litterally 20-30 hours total.

Now, I am being offered to be a contractor in Slovenia for a year. They will fly me out of Belgium to work 6-3 shifts. My partner has a job here. In a long term we want to come back to UK. Ultimately I have found an umbrella company in UK who can sort me out and place me on pay roll. They will also set me up a ltd company I believe.

I am a UK citizen. I have a place to live in UK. British registered car, bank account, parents etc etc. I would like to pay tax in UK, but I am trying to see how can I do it legally. How many days a year I need to be in UK to pay tax in UK? What's my best option advice? The contract is only for a year. We do travel to UK quite a lot, but not 183 days and not on 6-3 schedule.

[northernladuk]

I am a pilot.

That's what I tell all the girls as well. Works a treat doesn't it.

[dynamicq]

That's what I tell all the girls as well. Works a treat doesn't it.

How can you tell, how many pilots there are in a bar? They'll come and tell you.

To be honest I was just trying to explain what I do, maybe there is some treaty for pilots. Technically if you are in transit long enough for work, it shouldn't make you a tax resident.

[northernladyuk]

That's what I tell all the girls as well. Works a treat doesn't it.

Not so much when you're wearing your air hostess uniform.

[ladymuck]

I think you need a tax advisor first off, rather than ask a bunch of past-it IT contractors.

I have heard how some airlines have found interesting ways to engage with their pilots, in a manner that puts the pilots at risk whilst keeping the airlines' exposure to a minimum.

Depending on how much you're going to be earning, a brolly may not be the most tax efficient way to operate, especially with the ambiguity over where you are resident, which is why I suggest talking to a proper advisor.

[BlasterBates]

Generally you should be taxed where you do the work, so the side jobs should have been taxed in the UK. With regard to your contract in Slovenia, if you are working for a Belgian client, which is flying you out this seems a grey area, could be taxable in Belgium or Slovenia. You will be taxable on worldwide income in the country you live in, in this case Belgium. So whatever you earn and tax in the UK and Slovenia has to be declared as well in Belgium. However you will submit proof of paying tax on that income in another country so that they don't tax it or charge a minimal tax.

So to sumarise you will have taxable income in more than one country that should declare and pay tax, and there will be one country, the one in which you mainly live in, which will require all income to be declared because you are tax resident. Some contractors think not being tax resident means not having to pay tax, but in fact this is not the case.

This is complicated but unfortunately unavoidable to remain within the law.

[Old Greg]

Talk to Sue @ iPAYE. They may have some expert knowledge around your line of work.

[Sue B]

Sorry only just seen this

Happy to have a chat with you to discuss your situation, 0151 443 6830.

It should be quite straightforward to establish ordinary resident / tax resident status, but would need a bit more information.

Kind Regards

Sue

[Jess inniAccounts]

Residency status is based on your individual circumstances in each tax year and you would be required to complete certain tests to determine your status each tax year. HMRC provide some high level information in regards to this here. If you cannot establish your residency from these few points then you can use their more detailed guide here which also has flow diagrams to help.

Non-UK residents are generally only required to declare their UK income and not their income earned abroad on a UK tax return.

For the years you move in or out of the UK these may need to be considered as split years for the reporting of any self-assessment tax return. If you are looking to be considered a UK tax payer then you would need to meet at least the substantial ties test.

It is worth mentioning here that if your concerns are around maintaining qualifying years towards your UK state benefits, such as a state pension, this is derived from your national insurance contributions and not your income tax contributions. When your UK employer sends you to work in the EEA you may be able to continue making UK contributions for up to two years. As such, being employed by your own limited company and providing your pilot services from this may offer some advantage.

You are best to consider your overall position in terms of tax efficiency when working abroad and speak to a specialist tax adviser to ensure you remain compliant in both the UK and the country you work in.

[Craig@Clarity]

Generally you should be taxed where you do the work, so the side jobs should have been taxed in the UK. With regard to your contract in Slovenia, if you are working for a Belgian client, which is flying you out this seems a grey area, could be taxable in Belgium or Slovenia. You will be taxable on worldwide income in the country you live in, in this case Belgium. So whatever you earn and tax in the UK and Slovenia has to be declared as well in Belgium. However you will submit proof of paying tax on that income in another country so that they don't tax it or charge a minimal tax.

So to sumarise you will have taxable income in more than one country that should declare and pay tax, and there will be one country, the one in which you mainly live in, which will require all income to be declared because you are tax resident. Some contractors think not being tax resident means not having to pay tax, but in fact this is not the case.

This is complicated but unfortunately unavoidable to remain within the law.

In a round about way I agree. To add, you can be tax resident in more than one country (dual residency). If you're dual residence in the UK and another country that we have a double taxation treaty with, then this could prevent the OP from paying tax twice on the same income. If there is no double taxation treaty in place then it's usually the case that they can offset tax paid in one country against the tax due in the other country.