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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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hi could someone assist me with the following please. I

Customer Question

hi

could someone assist me with the following please. I will be moving to spain with my current company but will continue to be paid in pounds in the UK.

What tax issues do I face please?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question

My name is Sam and I am one of the UK tax expert here on Just Answer.

Can you advise
1) whether this is a permanent move
2) How many days each tax year do you think you will return to the UK
3) Will any of these visits be for work purpose
4) Will you retain any ties to the UK - family or property
5) if you will retain property will you let this out to tenants

Thanks

Sam
Customer: replied 2 years ago.

Hi


 


Please see the responses below:


 


1) whether this is a permanent move


Yes, this is a permanent move.



2) How many days each tax year do you think you will return to the UK
3 days per month approx


 


3) Will any of these visits be for work purpose, Yes 3 days per month to the UK office.



4) Will you retain any ties to the UK - family or property
Yes I have family in the UK and a propertyl.


5) if you will retain property will you let this out to tenants.
Yes the property will be let to tenants.


 


Please let me know if you need more info

Expert:  Sam replied 2 years ago.
Hi

Thanks for your responses

For UK tax purposes you will not meet the automatic tests to be treated as not resident - as although you will spend less than 91 days in the , you will spend more than 31 days in the UK for work purposes (it will ne bearer to 36 days)

So next has to be considered the UK tests

You might have to be considered as having UK property - but as this will be let out - then this will not be available for you use when you visit the UK so you do not have to be treated as resident for any of these tests either

So we left with just the ties tests

You have three ties - work, family and property but as this is less than four - you will be treated as not resident as an individual - however the days you work in the UK - may well remain liable to UK tax.

To proceed you need to arrange to complete form P85 for HMRC when you are due to leave, to see if HMRC can apply tax code NT (NO tax) on your earnings - but the fact you will spend more than 31 days in the UK (in fact any days) for main duty purposes - then you may find that HMRC opt to have you complete a self assessment tax return after the end of each tax year, to determine which element of your income remains liable to UK tax.

Link here for P85
http://www.hmrc.gov.uk/cnr/p85.pdf

Then you also need to be aware that the rental income will remain liable to UK tax, and as you will be treated as not resident - then you either have to
1) Arrange for the tenants or managing agent to deduct tax(basic rate) from the gross rents to pay over to HMRC OR
2) Apply for the Non residents landlord scheme - which allows you to receive the rents gross (without deduction of tax) and the tax considered at the year end.

I have added a link for the Non residents landlord scheme
http://www.hmrc.gov.uk/international/nr-landlords.htm


Either way you will be required to complete a self assessment tax return at each year end so that the rental income position can be declared and the UK income so HMRC can establish if any element of this remains libel to tax.

But on receipt of the P85 (and any NRL non residents landlord scheme application) HMRC will determine your residency and tax position officially.

Thanks

Sam




Customer: replied 2 years ago.


And what if I was to spend less than 36 days in the UK per year, how would my status change please?

Expert:  Sam replied 2 years ago.
Hi

Thanks for your question

It would just mean that you had two and not three ties, but as you still would be carrying out main duties in the UK - HMRC would still need to consider these and whether a liability to UK tax arose on them.

Thanks

Sam
Customer: replied 2 years ago.


I would be working out of the spain office and coming to london 1 per month / every 6 weeks.


 


In summary would I need to fill out a P85.


 


How would the Spanish government receive their tax if I was being paid in the UK. Would there be a mutual transfer between the countries?

Expert:  Sam replied 2 years ago.
Hi

Thanks for your response

That would not have any bearing aside from the fact you will continue to be paid from the UK - any chance you can be paid from the Spanish branch (this would solve the problem)

But if 1 days per 6 weeks, then HMRC will have no real issue - as that's just 12 days a year - rather than 36!

So yes you would complete form P85 and you would have to report your working and living in Spain to the Spanish tax authorities, and if ANT of your UK income suffered UK tax - then you would claim credit for the UK tax suffered against your Spanish position ( as we have a double taxation treaty with Spain) as this will allow you not to pay tax twice on the same income (without some relief on that)

And also put in place the necessary measures for the UK rental income

Thanks

Sam

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