Digital Nomads

[NotAllThere]

Is there a catch?

Determining residency.

https://www.gov.uk/tax-foreign-income/residence

Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).

You’re automatically resident if either:

• you spent 183 or more days in the UK in the tax year
• your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:

• you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
• you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

In between those, there's a huge grey area. For the automatically non-resident, it's the full tax year 6.4 to 5.4 that matters.

Leave the UK for Croatia 5th April next year. Don't visit the uk for more than 91 days, establish a home in Croatia, do work full time where you're living. Read up on Croatian tax law, and see how you can figure out the rules for being non-resident (n.b. different countries have different tax years). When you can establish that if you leave today, you'll be non-resident tomorrow, shift to another country. Avoid culture shock - it's not easy moving to live in another country, especially if you don't speak the language. Rinse and repeat.

Expect to be investigated. Understand that notwithstanding the "automatically non-resident" clauses, it's very easy to become tax resident.

Go for it. Let us know how it works out.

[eek]

1b why not use a uk company (just because?). That seems to be exactly what the Croatians expect to you do. Not sure about other countries.

Not sure why I’d declare dividends while away, just nice tax free salary!

Former UK base
UK limited company
UK client
HMRC will be expecting to see their share of tge money as you will still be tax resident in the UK for this work in their eyes.

[hugebrain]

Step 1 - check if the agency can cope / are willing to pay a none UK Company (most won't).
Step 1b - don't try and use a UK company as a front because

Step 2 - try and work out how to remove your UK tax residency (it's way, way harder than you might think and expect)

1b why not use a uk company (just because?). That seems to be exactly what the Croatians expect to you do. Not sure about other countries.

Not sure why I’d declare dividends while away, just nice tax free salary!

[jamesbrown]

Bear in mind that, even if you aren’t UK tax resident, you will be taxable on any dividends or capital gains received in relation to UK interests in the tax year you return to the UK if you return within 5 years (under the temporary non-residence anti-avoidance rules). In practice, this means gains on assets owned before your departure or dividends on UK profits realised before your departure but received during the period of temporary non-residence. It’s also quite hard to become non-resident under the new statutory residence test.

[eek]

Step 1 - check if the agency can cope / are willing to pay a none UK Company (most won't).
Step 1b - don't try and use a UK company as a front because

Step 2 - try and work out how to remove your UK tax residency (it's way, way harder than you might think and expect)

[courtg9000]

tax wise could be tricky.
Legals with the client could be equal or more so.
Get everything double checked.

[DaveB]

It gets complicated depending on how long you are out of the country for, where you are treated as being tax resident and any mutual taxation treaties that are in place.

While you are still a UK resident for tax purposes you will still pay tax at UK rates.

[hugebrain]

With all these remote working contracts available now, it seems there must be better places to do them from than the UK.

For example Croatia lets you work there with zero tax for the first year. So, more than twice as much money, beaches and better weather.

Is there a catch? Are there any legal problems with doing this?

What other countries have similar schemes?