hi all,
some background:
i've just arrived in the uk, on a working holiday visa and will probably convert to the HSMP (kind of kicking myself that i didn't just get that to begin with now). i have got a contract lined up, and i'm trying to find out whether there are any tax efficient options open to me due to my non-domiciled status in the UK (i'm tax-resident in Australia).
for those who don't want to read below, the options i have at the moment are:
are there any others?
i have done a search on the forum, but it's a bit confusing at times so i'd like to know if i've got it right.
i know the popular option on this board seems to be to get yourself outside IR35 (i think my work practices would fall outside IR35, but not 100% sure yet) and go with a limited company. this is definitely the way to go if tax-resident here, but in Australia any dividends paid to me (or even profit held in the Ltd Co) would more or less be taxed as PAYE income, so it doesn't have the benefits that it does for most. I could still split my income between the two tax jurisdictions (salary taxed here, dividends taxed there).
two other schemes have been offered to me:
one involves a dual employment structure where you are paid a salary here by a local company (say 30k) and the remainder is paid to you by an overseas company based in singapore. technically the overseas payment is for 'work performed while on international assignment', so you have to leave the country for 7 days or more. this has been discussed before on this board and i think the consensus was that it amounted to tax evasion (albeit hard to prove).
the other involves being paid a salary here, with the remainder being put into an EBT based in the Isle of Man, with discretionary bonuses in the form of interest free loans being paid on a 4-6 week bonus. it is a tax avoidance scheme that is registered with HMRC. i gather the risks with this are that you are legally obliged to pay back the loans, so if the worst were to happen and the company went bankrupt the administrators would come after you. the other problem is that HMRC could change the regulations and then you would be retrospectively liable for all the unpaid tax + interest?
please correct me if i'm wrong about any of the above. i'd also like to know if there are any other tax efficiency options open to me as a non-domicile that are legal (which would discount the singapore option) and safe (which would discount the EBT).
some background:
i've just arrived in the uk, on a working holiday visa and will probably convert to the HSMP (kind of kicking myself that i didn't just get that to begin with now). i have got a contract lined up, and i'm trying to find out whether there are any tax efficient options open to me due to my non-domiciled status in the UK (i'm tax-resident in Australia).
for those who don't want to read below, the options i have at the moment are:
- umbrella
- limited company
- dual employment (uk and singapore)
- offshore EBT
are there any others?
i have done a search on the forum, but it's a bit confusing at times so i'd like to know if i've got it right.
i know the popular option on this board seems to be to get yourself outside IR35 (i think my work practices would fall outside IR35, but not 100% sure yet) and go with a limited company. this is definitely the way to go if tax-resident here, but in Australia any dividends paid to me (or even profit held in the Ltd Co) would more or less be taxed as PAYE income, so it doesn't have the benefits that it does for most. I could still split my income between the two tax jurisdictions (salary taxed here, dividends taxed there).
two other schemes have been offered to me:
one involves a dual employment structure where you are paid a salary here by a local company (say 30k) and the remainder is paid to you by an overseas company based in singapore. technically the overseas payment is for 'work performed while on international assignment', so you have to leave the country for 7 days or more. this has been discussed before on this board and i think the consensus was that it amounted to tax evasion (albeit hard to prove).
the other involves being paid a salary here, with the remainder being put into an EBT based in the Isle of Man, with discretionary bonuses in the form of interest free loans being paid on a 4-6 week bonus. it is a tax avoidance scheme that is registered with HMRC. i gather the risks with this are that you are legally obliged to pay back the loans, so if the worst were to happen and the company went bankrupt the administrators would come after you. the other problem is that HMRC could change the regulations and then you would be retrospectively liable for all the unpaid tax + interest?
please correct me if i'm wrong about any of the above. i'd also like to know if there are any other tax efficiency options open to me as a non-domicile that are legal (which would discount the singapore option) and safe (which would discount the EBT).
) but I suggest you contact a professional tax advisor back in Oz that knows the mutual rules between the two countries, or hope another Aussie turns up here.
. mostly i'm here to see the sights, experience living somewhere that's not a colonial backwater 
. if i make some money along the way that's a nice bonus. my personal take is that the home office is trying to discourage companies from seeing this as a 'cheap' way to get a short-term work permit for employees they should rightfully be sponsoring.
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