Some examples of advice
Some examples of advice
Ben has been seconded by his UK employer to Italy for 12 months from 1 September to 31 August . He works 6 weeks on and 4 weeks off spending all his time off in the UK and travels all over Italy for work, so he has no home in Italy. His home in the UK remains available to him and he stays there when he visits the UK. This has resulted in him remaining resident in the UK throughout his assignment. He does not physically perform any work in the UK.
His remuneration package is as follows:
UK Tax Implications.
He will be taxed on £60,000 pa i.e. his salary.
Due to tax reliefs, he will not be taxed on his accommodation and no tax will be due in respect of private medical insurance (conditions apply).
Ben will be in a double tax situation paying tax in both Italy and the UK on the same income, he will, therefore, need to look at the Double Tax Treaty between the UK and Italy to see if any exemption or relief from tax can be claimed under the treaty and, if not, which country has to give him relief for the double tax (most likely the UK).
Kurt is on a 25 month secondment to the UK from Germany which started on 1 July. He is not tax equalised and is, therefore, responsible for his own taxes. He has never visited the UK before.
He receives the following:
Kurt’s employer pays directly for his accommodation while in the UK which amounts to £18,000 pa. Kurt is a member of a private pension scheme in Germany and pays contributions into the scheme of £4,000. Kurt performs 20% of his duties outside the UK while on secondment, with all his salary paid into a UK bank account. It is established he is resident in the UK under the SRT throughout all of his secondment.
UK Tax Implications.
Kurt will be regarded as resident from 6 April prior to his arrival on 1 July, therefore, he will need to see if split year treatment will apply to split the tax year between an overseas part, when he is treated as if a non-resident, and a UK part, when he is treated as a resident. This will also apply for the tax year of his departure from the UK.
He will be taxable in the UK on £98,150 i.e. on his salary and on the beneﬁts he receives (the company car, medical insurance and provision of accommodation),
He will not be taxed on his home leave travel (providing certain conditions are met).
No tax relief will be available for the contributions Kurt makes into his pension scheme and, if beneficial, relief for earnings from overseas work days may have been available if he had been paid into an overseas bank account and not remitted the earnings to the UK.
If Kurt’s secondment had been less than the original 25 months, then detached duty tax relief may have been available and his accommodation would not have been taxable (assuming all relevant conditions had been met).
Regarding Kurt’s pension contributions, if appropriate approval had been obtained from the Revenue, he may have been able to have had a tax deduction for the contributions he made.
Julie has decided to start a new life in Australia. She has always spent her life in the UK and leaves the UK for good on 1st September. She has no intention of returning to the UK. She retains her home in the UK and has decided to rent it out. She also has 2 other properties in the UK, which she has always let out. She decides to keep one, but sell the other property to finance her move to Australia. She sells this property during the June prior to her departure and makes a gain on this sale. She purchased all her properties before 6 April 2015.
UK Tax Implications.
Even though Julie spent less than 183 days in the UK during the tax year, she satisfies the only home in the UK test under the SRT and so will be regarded as resident in the UK for all of the tax year i.e. until the following 5 April, potentially being in a double tax situation from when she moves to Australia to 5 April i.e. taxed on her income in both the UK and Australia.
In this situation she will need to see if split year treatment applies, so that she can be treated as a non-resident for part of the tax year. Failing that she can look at the double tax treaty between the UK and Australia to see if there is any exemption or relief from tax which she can claim under the treaty.
She will be subject to UK capital gains tax on the sale of her investment property regardless of whether or not she is resident for UK tax purposes. However, if she had waited to sell the property as a non-resident, then she would only be subject to UK capital gains tax on the gain from 6 April 2015, rather than from when she first acquired the property. Alternatively, if she kept this property and sold her home instead, as this had been her only main residence she would obtain relief for this.
Julie will be automatically covered by the non-resident landlord scheme and so have tax deducted from her rental income by her letting agent, if she has one, or tenant if not. She can apply to HM Revenue & Customs to receive this rental income gross with no deduction of tax, although she will still need to declare this income on her UK tax return and pay over any tax due under the self-assessment system.
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Juliet Connolly has co-written these books for, not only Britsh expats living overseas, but also for any individuals living abroad with interests in the UK or vising the UK, whether for work or pleasure. Click on the books for further details of what is covered and how to purchase them. Are you an employer in the UK sending employees overseas to work? If yes, these books are ideal to give employees before they leave the UK and could potentially replace departure meetings.
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