Inside IR35 Contract and Staying out of UK

[Divya Chandrakumar]

In that case the problem is with your contract and the end-client as I suspect that you’ll be in breach of contract and they will find out soon enough once they realise that you’re not available in the afternoons. That time difference is going to be quite punishing quite quickly.

No, I work in UK hours. So, when I am in India the work hours are just between 2:30 PM (5.5 hours ahead of GMT, 4.5 hours ahead of BST) during DST to 10:00 PM (I do not take any lunch hour - so, 7.5 hours per day). And, it is from 1:30 PM to 9 PM (I do not take an lunch hour - so, 7.5 hours per day). I do not miss any meetings and I am available at all times when my colleagues are working.

In fact, I usually start my 12:30 PM...so, I work longer hours (but that is beside the point).

[Fred Bloggs]

Of course, bear in mind that it's actually quite hard to become non-resident for tax purposes with the SRT, so you'd better be sure you are first.

Correct. And if you leave UK today then it will be after April 5th 2024 UK tax return before you are actually sure you are not UK tax resident. And it would involve applying for split year treatment after 6th April 2023 for the current tax as of today, if you left today. It's quite likely UK source income remains taxable in the UK anyway. All the time I was outside the UK I paid tax on UK sourced income. I passed the first statutory residence test the day I left too.

[Fred Bloggs]

No, I am perfectly happy paying all the tax, NI contribution, Apprenticeship Levy, Employer Contribution and anything else that is mandated my law.

This is NOT to avoid paying taxes.

Well done. Refer to my last post. You're quite possibly going to be paying UK tax on UK source income anyway. I always did.

[jamesbrown]

As I said, if you are, in fact, non-UK resident for tax purposes (and you may well be resident under the SRT even if you think you are non-resident), then you will need an NT tax code for your umbrella to apply. But, one way or another, you will be paying tax on your income, whether in the UK or India or both, subject to any dual tax agreement, and your employer will be paying ErNI and the AI, regardless.

Beyond what I've said about the mechanics (an umbrella won't be able to do anything without a correct tax code), our resident expert on these matters may be able to help further: Sue B.

[Fred Bloggs]

As I said, if you are, in fact, non-UK resident for tax purposes (and you may well be resident under the SRT even if you think you are non-resident), then you will need an NT tax code for your umbrella to apply. But, one way or another, you will be paying tax on your income, whether in the UK or India or both, subject to any dual tax agreement, and your employer will be paying ErNI and the AI, regardless.

Beyond what I've said about the mechanics (an umbrella won't be able to do anything without a correct tax code), our resident expert on these matters may be able to help further: Sue B.

Reading what the OP has just said. There is no chance at all of passing statutory residence test.

[Fred Bloggs]

Sorry, if the question was not clear.

1. Yes, the work is for a charity / non-profit organisation based in UK.
2. OK, so, I am staying in India which means, that I just need to tell India's Tax Authorities that I am already paying tax in UK? Understood.
3. No, no - the work is fully remote and I was living in the UK (as I am a naturalised citizen of UK). I moved back to India for some personal commitments (to take care of family).
4. The Tax Resident Authority? Is it HMRC that needs to be told about the UK Tax Resident Status?

I will inform HMRC, but I do not want to run the risk of informing HMRC and them updating my umbrella company who updates my client and run into problems.

Instead, I would just move back to UK - stay for 181 days and then move back to India for less than 180 days and continue like that.

You need to do your homework. You simply do not pass any of the statutory residence tests on that basis. Read RDR3 guidelines, they're actually very clear. And on the basis above, you cannot pass them and be non UK tax resident.

[jamesbrown]

Reading what the OP has just said. There is no chance at all of passing statutory residence test.

This is very likely true, but it's also something on which the OP will need the advice from someone who understands their situation. I continue to be amused by how many people come on to forums like this one looking for specialist tax advice (and you cannot get much more specialist than tax across multiple jurisdictions), rather than mere general guidance about where to look or an overview (which is perfectly fine, of course, and we've probably provided about all the OP can expect on that front).

[Divya Chandrakumar]

You need to do your homework. You simply do not pass any of the statutory residence tests on that basis. Read RDR3 guidelines, they're actually very clear. And on the basis above, you cannot pass them and be non UK tax resident.

That is actually fine. :-)

It makes my life easier as I would just be paying taxes like usual. I am happy being a UK Tax resident and paying taxes.

I will of course, also, need to pay taxes in India (for earnings made in India), but that I can work out with UK accountant - i.e., tell them that I have already paid Income Tax for earnings made in India (from saving bank accounts or fixed deposits).

[Divya Chandrakumar]

This is very likely true, but it's also something on which the OP will need the advice from someone who understands their situation. I continue to be amused by how many people come on to forums like this one looking for specialist tax advice (and you cannot get much more specialist than tax across multiple jurisdictions), rather than mere general guidance about where to look or an overview (which is perfectly fine, of course, and we've probably provided about all the OP can expect on that front).

Yes, thank you!

I have emailed my husband's Accountant but they are all away on Christmas break and so, was asking the question here hoping someone else was in the same situation. Even though the accountants' do have the qualification, more often than not, they would not have experienced something unique such as this but someone in here would have (or after my experience, someone else in future would benefit from) additional insights.

[Fred Bloggs]

That is actually fine. :-)

It makes my life easier as I would just be paying taxes like usual. I am happy being a UK Tax resident and paying taxes.

I will of course, also, need to pay taxes in India (for earnings made in India), but that I can work out with UK accountant - i.e., tell them that I have already paid Income Tax for earnings made in India (from saving bank accounts or fixed deposits).

Indeed your situation is pretty easy really. Devil is in the detail of course. But do your homework and read RDR3. Also study the dual tax treaty between UK and India. I believe what you will discover is that you will be liable for UK tax in UK source income and Indian tax on Indian source income. Dual tax treaty sets this out. If what you say is absolutely correct you have little to worry about beyond keeping scrupulous records and filling in UK and Indian tax returns every year. I was tax resident in multiple countries for several years. India will probably want to tax you on your UK work done whilst sitting in India. The tax treaty will help you not paying double tax on one income.