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For the last 3 years I have been teaching for about 5 weeks

Customer Question

For the last 3 years I have been teaching for about 5 weeks each year in Italy employed by an Italian university. Up till now, I have claimed exemption from Italian income tax and declared the income approx 5200 euros) on my partnership tax return (nature of business: statistical consultancy). The University pay me a lump sum of around 5200 euros at the end of my contract and I subtract from this expenses (all receipted) for travelling to Italy and back and for part of my accommodation while I am there. I have then paid income tax on the net profit.
I have now been told that this year (after I finished my teaching) the University will deduct Italian income tax (30%) before sending me the balance and there seems no mechanism for claiming expenses. Presumably I won't have to pay UK income tax on the balance but can I still claim these expenses against my UK income tax liability on the partnership tax return?
Thanks.
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Hi

 

Thanks for your question

You will continue to do what you have been doing (adding the income into the partnership income) and claiming the allowable business expenses, the only difference is that you also should have been filling in this income/expenses information on a foreign income page so that HMRC knew how much of your partnership income was paid from a foreign source. (and up until now this would not need to show foreign tax suffered as it had not been)

From now on, you still have to complete the foreign income page (as well as show this within the partnership income) , along with the with holding tax suffered so that HMRC do not make you suffer tax twice on the same income.

 

Thanks

 

Sam

Customer: replied 3 years ago.

Thanks for this. Are we talking about the foreign income page on my personal tax return (ie SA106)? And where exactly do I show income/expenses tax paid on my partnership return (I use a short statement). Thanks again.


Graham

Expert:  Sam replied 3 years ago.

Hi Graham

 

Thanks for your response

 

No on the supplementary foreign page on the partnership return.

SA802 see link here http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=B3Zs4L542Z4&formId=3113

 

As you advised this was money earned through the partnership.

Then the income on the main partnership will be added within as a total income, and the expenses claimed with other expenses, and just the income and the foreign tax suffered on the foreign page.

 

Thanks


Sam

 

Customer: replied 3 years ago.

Thanks again Sam. Having now looked at the form though I'm perhaps even more confused as all the boxes seem to relate to income from savings, land and property.


Also while the top of the form says fill in if the partnership had "any other income from sources outside the UK (except foreign income earned in the course of the partnership trade or profession - include this in the Partnership Trade and Professional Income pages, instead)." I thought that this describes my income?


Sorry to be a nuisance!


Graham

Expert:  Sam replied 3 years ago.

Hi Graham

 

You are not being a nuisance at all and I do apologise you are correct regarding the SA802 - it is entered into the partnership main return, but I have no idea how you get the tax credit suffered, so I shall opt out and let another expert help you

 

Thanks

 

Sam

 

 

 

 

 

 

 

 

 

 

Customer: replied 3 years ago.

OK. Thanks for your time Sam. Do I have to contact another expert or does that happen automatically?


Graham


 

Expert:  Sam replied 3 years ago.

Hi Graham

 

This should happen automatically (but if you respond to this response asking for another expert to assist then this will put the question back on the board)

 

Thanks


Sam

Customer: replied 3 years ago.

Sam has suggested that I ask for another expert to assist with my question. Thanks.

Customer: replied 3 years ago.
Original Question


For the last 3 years I have been teaching for about 5 weeks each year in Italy employed by an Italian university. Up till now, I have claimed exemption from Italian income tax and declared the income approx 5200 euros) on my partnership tax return (nature of business: statistical consultancy). The University pay me a lump sum of around 5200 euros at the end of my contract and I subtract from this expenses (all receipted) for travelling to Italy and back and for part of my accommodation while I am there. I have then paid income tax on the net profit.


I have now been told that this year (after I finished my teaching) the University will deduct Italian income tax (30%) before sending me the balance and there seems no mechanism for claiming expenses. Presumably I won't have to pay UK income tax on the balance but can I still claim these expenses against my UK income tax liability on the partnership tax return?


Update


A previous expert on this site helped as far as she could then pulled out as she wasn’t sure how to proceed with the detail. My understanding now raises two questions:


1. The Partnership Foreign supplementary page (SA802) says at the top of the form that I should fill in SA802 if the partnership had:


"any other income from sources outside the UK (except foreign income earned in the course of the partnership trade or profession - include this in the Partnership Trade and Professional Income pages, instead)."


So as this is income from my trade or profession, I should enter it on the pages suggested. But where? I intend to add it into the turnover figure at 3.24 with my travelling and accommodation expenses included in 3.25 on the Short Partnership return. Is that right?


 


2. What to do about the income tax (at 30%) already deducted by the University in Italy? Looking at HMRC’s Foreign Notes for SA106 (individual taxation) it says on page FN3:


“If your overseas income and gains have had foreign tax deducted it may be possible to obtain relief from double taxation. Foreign Tax Credit Relief is normally the best way to obtain such relief, but if you do not want to or cannot claim it, you can deduct the foreign tax when calculating the amount of income and gains chargeable to UK tax. You cannot do both.”


So by analogy, as I don’t want to claim the Foreign Tax Credit Relief, I intend to deduct the Italian tax from this income before adding it into 3.24. Is that right?


 


I’m hoping the answers are yes and yes! If not, how should I proceed (with as little fuss as possible!)



Many thanks.


 


Graham


Expert:  Nicola-mod replied 3 years ago.
Hello Graham,

It seems the professional has left this conversation. This happens occasionally, and it's usually because the professional thinks that someone else might be a better match for your question. I've been working hard to find a new professional to assist you with your question, but sometimes finding the right professional can take a little longer than expected.

I wonder whether you're OK with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Nicola
Customer: replied 3 years ago.

Hi Nicola


Yes I'll wait a bit longer so please try to get another expert to help. I think though I need to amend the question as I think my suggestion in update 2 above would result in me paying tax twice. So I guess I must apply for foreign tax credit relief. The question then is, how do I do this on the short partnership form?


Could you please add this to my question? Or would it be easier to cancel the original question and start again with an edited one?


Thanks


Graham


 

Expert:  Nicola-mod replied 3 years ago.

Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola

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