Working in the Middle East

[ASB]

The only way you can (legally) give a UK resident £35k and them not pay tax on it is if you're married to them, and even then it has to be an unconditional gift and it would be best not to pay it into a joint bank account. I'm not sure about the status of these new-fangled civil partnership things, the same may be true of them but you would be advised to check first. Of course, if the £35k were a suitcase of cash you brought back with you, that would be a matter for your friend and their conscience as to whether to declare it. Not declaring, would of course be a criminal tax evasion offense and likely to be severely punished if caught out.

It's not that clear cut. As usual

Firstly there is quite a lot of good info in the HMRC site, so the OP would be well advised to review that in accordance with his situation. Broadly the situation is this:-

- You can give 3k of captial to anybody you like annually.
- You can give >3k in certain circumstance - weddings etc.
- You can give as much of your income to anybody (after taxes) as you care to. Provided it does not affect you living standards.

These have no tax consequences for the donor or donee (caveat it is possible that the donor may be taxed on the income generate if it flows back to them).

Gifts in excess of 3k out of capital are a bit more tricky. First of all they are a "potentially exempt transfer". Inheritance tax is payable by the estate if the donor dies within 7 years. Secondly if it is a "gift with reservation" then it will be entirely irrelevant from a POV of inheritance tax on the donors death. Thiirdly it is entirely possible for the donor to be taxed on the income generated from the gift if it is caught by S660 (any part thereof).

Generally the are no tax consequences for the recipients of genuine gifts. However it is not unknown for the tax man to want to classify these as income.

However, if someone were hoping to earn money overseas and gift it to someone then that is fine. What won't happen is the donors UK tax liability if any being reduced. Being out of the country but still tax resident (and domiciled) will get you a bill on your earnigs even if you have given it all away.

[Davros]

If I work in the Middle East for 12 months and therefore tax free, am I ok to give some of the money to someone else in the Uk without them paying tax or declaring it? It will be about £35k?

Also, if I am out here for less than 12 months and I invest the money earned out here rather than taking it back into the Uk do I have to declare it and pay tax on it?

The only way you can (legally) give a UK resident £35k and them not pay tax on it is if you're married to them, and even then it has to be an unconditional gift and it would be best not to pay it into a joint bank account. I'm not sure about the status of these new-fangled civil partnership things, the same may be true of them but you would be advised to check first. Of course, if the £35k were a suitcase of cash you brought back with you, that would be a matter for your friend and their conscience as to whether to declare it. Not declaring, would of course be a criminal tax evasion offense and likely to be severely punished if caught out.

As to your other question, it's all about residency as the UK operates a mondiale tax system. If you are 100% resident in the Middle East, then there is no UK tax to pay (within the usual parameters of how long you are out of the country, etc - see HMRC website for details). If you remain registered as a UK resident then you pay UK tax on 100% of your world wide earnings and can claim a credit against tax in any country that has a bi-lateral tax treaty with the UK.

[aussieItman]

To be honest I am not sure about the tax implications when you work in a tax free environment and then return to the UK or whereever, but I used to work in Qatar (tax free) and when returning to Australia you had to declare what you earnt whilst overseas as this was taken into account when you did your personal tax return. However I basically stated I was on 'holiday' and so paid nothing. What the hell is the point in working in a tax free country if u then have to pay tax returning to Australia. Anyway it would be very easy to get away with it, even if u had to pay some sort of tax on it.

[NewBoy]

If I work in the Middle East for 12 months and therefore tax free, am I ok to give some of the money to someone else in the Uk without them paying tax or declaring it? It will be about £35k?

Also, if I am out here for less than 12 months and I invest the money earned out here rather than taking it back into the Uk do I have to declare it and pay tax on it?