Best way for short term contract when living abroad

**expat** · 12 December 2007, 10:45

Originally posted by richclever View Post

Hi,

Just had a call possibly offering me a couple of weeks work.

As I live in france and have a French company I was told that I would either need to set up a Ltd company in the Uk or work as under an Umbrella company in the UK. For ease of things as it's just a short term contract the Umbrella company seems the best model.

however, obviously I am under French taxation so have to pay income tax here not in the UK. Does anyone know how that would work? I have an NI number in the Uk as I'm British but don't know how best to approach things.

Obviously I'll also ask around back here to see what the consensus is.

thanks,

AIUI you are not "under French taxation" definitively. Earnings in the UK are taxable in the UK. The French will give you a credit against French tax for tax paid in the UK.

OTOH you should not need to pay NIC in the UK, provided that you are French tax-resident and armed with E101/E128/whatever it is these days. Important because that is "not a tax" so the French will not gve you a credit for it.

Ask a good umbrella. I never had to do this but when I thought I might, I called an umbrella spoken well of hereabouts, and they said they would have no trouble with it.

Hints:
1. phone the International Offices of the tax authorities of both countries.
2. try to make sure that both countries agree on what type of income it is. If one thinks it's salary and the other thinks it's dividend, you may get taxed in both. Using an umbrella should fix this.

**richclever** · 12 December 2007, 11:00

Thanks Expat, I was wondering about that actually.

So, it looks like it's just the NI that I need to worry about then. Definitely don't want to have to pay twice for that!!

If I get some longr contracts then I think I'll go down the Ltd company as I'm planning to relocate back to the Uk anyway. the Umbrella seems the logical one for this gig though.

**alreadypacked** · 12 December 2007, 12:43

I recently did a 4 month contract in London, I am a non-resident and the contract didn't take me over the max number of days in the UK. I invoiced from my overseas company.

So it depends on if you intend on staying longer than the max day.

HTH

**richclever** · 12 December 2007, 12:45

It's just a couple of weeks and I believe you need to be in the UK for 180 days or so to be in the UK system for tax.

I did mention about invoicing from m y French business but was told that it would have to be a UK Ltd company or Umbrella.

**expat** · 12 December 2007, 13:17

Originally posted by richclever View Post

It's just a couple of weeks and I believe you need to be in the UK for 180 days or so to be in the UK system for tax.

1. ALL income derived from work in the UK is liable to UK tax, whether you are in the UK tax system or not.

2. If you are "in the UK tax system" (due to being in the UK for >183 days in one year, or an average of > 91 days over 4 years), then all income from anywhere is potentially liable to UK tax, subject to double-taxation elimination treaties.

3. Don't confuse #1 and #2. You might well get away with it, but these are the rules. If you earn the money from UK work, it is liable to UK tax, no matter where you are tax-resident or how little time you spend in the UK.

**richclever** · 12 December 2007, 13:30

I certainly wasn't going to try to get away with not paying tax!!

Thanks for the clarification on point 1, very useful.

**ASB** · 12 December 2007, 14:16

Originally posted by expat View Post

1. ALL income derived from work in the UK is liable to UK tax, whether you are in the UK tax system or not.

2. If you are "in the UK tax system" (due to being in the UK for >183 days in one year, or an average of > 91 days over 4 years), then all income from anywhere is potentially liable to UK tax, subject to double-taxation elimination treaties.

3. Don't confuse #1 and #2. You might well get away with it, but these are the rules. If you earn the money from UK work, it is liable to UK tax, no matter where you are tax-resident or how little time you spend in the UK.

If the work is not performed in the UK then that doesn't apply.

**richclever** · 12 December 2007, 14:42

It will be so no problems there!!

Wonder if I'll be able to claim travel expenses to the UK

**NotAllThere** · 12 December 2007, 14:45

If you work through your offshore company, then that company is liable to pay taxes on any profit it makes in the UK. All my company income, after expenses, is taken out as salary. Effectively, my company profit each year is as near to zero as makes no difference. So, I don't see how any tax can be due to be paid to the UK on that score.

For personal taxation, income arising from working in the UK is subject to UK tax (though not NI as observed earlier). What's to stop my employer (i.e. my offshoreltdco) paying me a much lower salary when I'm in the UK than when I'm back offshore? Perhaps if I do a four month gig, then HMRC will say that 1/3 of my annual salary for that year is subject to UK tax, subject to double taxation agreements? But what if I pay myself a base salary with a bonus according to my charge out rate. And different clients often pay different rates!

What does income arising mean, and how do HMRC work out which income arose where?

Best way for short term contract when living abroad