Foreign Income Tax - advice needed

[tigerinopen]

Hi All,

I need some advice on the foreign income tax. For the financial year, 2012-13, I was in the country only for 2 months. I found a job overseas and left the country with intention of settling down abroad and not return back. However as things did not turn out that great, I decided to come back to UK and I am back in the country now. So for that particular financial year, I worked out of UK for the 10 months and paid my taxes there.

Now will I have to pay tax here as well of my overseas income which has already been taxed at the source? I probably have to declare it but not sure about the tax side of things. There is a double taxation treaty between the two countries.

I am sure this probably has been discussed before as so many of us work here and other parts of the Europe.

BTW, this country I moved to is not in Europe if that matters for tax purposes.

Please help, advice or put me in the right direction.

Cheers,

[Martin at NixonWilliams]

Hi All,

I need some advice on the foreign income tax. For the financial year, 2012-13, I was in the country only for 2 months. I found a job overseas and left the country with intention of settling down abroad and not return back. However as things did not turn out that great, I decided to come back to UK and I am back in the country now. So for that particular financial year, I worked out of UK for the 10 months and paid my taxes there.

Now will I have to pay tax here as well of my overseas income which has already been taxed at the source? I probably have to declare it but not sure about the tax side of things. There is a double taxation treaty between the two countries.

I am sure this probably has been discussed before as so many of us work here and other parts of the Europe.

BTW, this country I moved to is not in Europe if that matters for tax purposes.

Please help, advice or put me in the right direction.

Cheers,

Even though you were only in the country for two months you may still be considered a UK resident for tax purposes. If you are resident, ordinarily resident and domiciled in the UK, you will need to declare your worldwide income on your tax return. You will receive relief for any tax paid twice at the the lowest of the effective rates of tax in the two countries.

If you had remained abroad you may have been eligible for split year treatment, meaning you would only be taxed on your UK income up to the point that you left the UK.

It is difficult to give you any concrete advice without knowing your exact circumstances. I would suggest speaking with an accountant who specialises in foreign taxes before doing your tax return etc as there are other things to consider.

I hope this helps.

Martin

[engineer123]

Hi All,

I need some advice on the foreign income tax. For the financial year, 2012-13, I was in the country only for 2 months. I found a job overseas and left the country with intention of settling down abroad and not return back. However as things did not turn out that great, I decided to come back to UK and I am back in the country now. So for that particular financial year, I worked out of UK for the 10 months and paid my taxes there.

Now will I have to pay tax here as well of my overseas income which has already been taxed at the source? I probably have to declare it but not sure about the tax side of things. There is a double taxation treaty between the two countries.

I am sure this probably has been discussed before as so many of us work here and other parts of the Europe.

BTW, this country I moved to is not in Europe if that matters for tax purposes.

Please help, advice or put me in the right direction.

Cheers,

I am in a similar situation. I called up HMRC and they advised that my foreign earnings will be taxable in the UK as I was still resident in the UK for tax purposes. Only when one is abroad for complete tax year then split year treatment can be applied. However, you can claim foreign tax credit for income tax paid in the foreign country. Read HMRC6, it's a good starting place to understand these issues.

Depending upon the terms of foreign employment, there could be few expenses related to travel, rented accommodation and subsistence in the foreign country which could be claimed as expenses towards foreign earnings. However, it is a complex issue and I am not sure if it can be applied to our case.

Could any of the resident accountants advise, please?

[tigerinopen]

Thanks Martin@Nixon Williams and engineer123,

Can you or someone else please provide reference of an accountant who specializes or have expertise in foreign income. It is a complex area of taxation and I need some assured advice. That will be really helpful.

Regards,

[Jessica@WhiteFieldTax]

I am in a similar situation. I called up HMRC and they advised that my foreign earnings will be taxable in the UK as I was still resident in the UK for tax purposes. Only when one is abroad for complete tax year then split year treatment can be applied. However, you can claim foreign tax credit for income tax paid in the foreign country. Read HMRC6, it's a good starting place to understand these issues.

Depending upon the terms of foreign employment, there could be few expenses related to travel, rented accommodation and subsistence in the foreign country which could be claimed as expenses towards foreign earnings. However, it is a complex issue and I am not sure if it can be applied to our case.

Could any of the resident accountants advise, please?

Special rules for employees travelling to work outside the United Kingdom: contents page is the starting place for expenses working abroad, however in practice these rules don't come into play that often; the "normal" expense rules we love (eg 24 month rule) cover most circumstances.

Of note with the expense rules above are the rules for travelling to and from the work abroad, covered at Foreign travel rules: duties performed wholly abroad: employee's interim journeys to and from the United Kingdom - but the sting in the tail is the relief is only granted if the employer has reimbursed the costs.

Really you need to pick through this on a line by line basis and see what applies.

Re guidance HMRC6 only applies up to end 12/13, for current rules you need to see RDR1

http://www.hmrc.gov.uk/cnr/rdr1.pdf

HMRC web site suggests RDR 1 applies from 12/13 onwards and there some overlap on 12/13 from both sets of guidance. Again, devil is in detail.

[Jessica@WhiteFieldTax]

Thanks Martin@Nixon Williams and engineer123,

Can you or someone else please provide reference of an accountant who specializes or have expertise in foreign income. It is a complex area of taxation and I need some assured advice. That will be really helpful.

Regards,

Most accountants should be able to cover the UK aspects of this which, I think, is what you are asking about?

Do you have an accountant at present, if so they should be your first stop?