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TaxRobin
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Hi, I am a Canadian citizen, working / living in the UK

Resolved Question:

Hi,

I am a Canadian citizen, working / living in the UK since 2000. I have worked on a full-time basis for the same UK-based company since 2000. I am married to a UK citizen and have children. I live in London – and jointly own our house with my wife (we have a mortgage).

As a family, we are planning to relocate to Northern Cyprus in September 2014. I will remain with the same company (with same job, on a full-time basis, 37.5 hours per week) and primarily work remotely from N. Cyprus, but will be expected to occasionally travel to the UK for work purposes throughout the year. I anticipate less than 90 days of work in the UK. For the remainder of the year, I will work in N. Cyprus.
We plan to rent our house in London once we relocate to N. Cyprus. My company will pay for my travel (airfare) and accommodation (hotel) when I come to the UK for work purposes.

I have several queries:
1. From a tax perspective, once I move to N. Cyprus, will I be considered UK resident, non-resident or non-domicile?
2. Will I be expected to pay UK tax on my full year earnings (including the days I work in N. Cyprus)? Would Overseas workday relief be applicable for the days I work in N. Cyprus?
3. Will I continue to pay tax via PAYE? Or will I need to submit a tax return at the end of the year?
4. Will I be able to continue making my pension and NI contribution?
5. My company will pay for my travel and accommodation in UK. What, if any, are my tax obligations for this (i.e., benefit in kind)?
6. I am planning to apply for British citizenship (having been in the UK since 2000). Will having a British citizenship (rather than Canadian citizenship) change my situation from a tax perspective?
7. Will I be expected to pay UK tax on my rental property income (as we will be renting our house)?

Thanks.

Regards,
Ed
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello,
1. From a tax perspective, once I move to N. Cyprus, will I be considered UK resident, non-resident or non-domicile?
You will be considered a non-resident as long as your days in the UK are not over the limit (91 days in any year for 4 years)
2. Will I be expected to pay UK tax on my full year earnings (including the days I work in N. Cyprus)? Would Overseas workday relief be applicable for the days I work in N. Cyprus?
If you're non-resident but work partly in the UK, you'll pay UK tax on the part of your earnings allocated to that work. You usually allocate your earnings by looking at the number of days you work in the UK and the number of days you work abroad.
3. Will I continue to pay tax via PAYE? Or will I need to submit a tax return at the end of the year?
The basic rule is that your UK employer must continue to calculate and deduct PAYE tax in the normal way from all the payments to you.
If you are going to be there on a contract for a year or more your employer should ask you to complete a form P85 and they will send it to HMRC who will consider an appropriate tax code.
4. Will I be able to continue making my pension and NI contribution?
Yes, but, the general rule is that you will pay social security contributions to the country you are working in. If your work abroad is not expected to exceed 24 months, or you normally work in two or more EEA countries, then you may be required to continue paying UK NICs and will be exempt from paying contributions in Cyprus. Your employer should apply to HMRC for a Portable Document A1 (or E101) for you so that you can continue to pay UK NICs.
5. My company will pay for my travel and accommodation in UK. What, if any, are my tax obligations for this (i.e., benefit in kind)?
As long as your company stays withing the limit amount then there would not be tax obligation.
6. I am planning to apply for British citizenship (having been in the UK since 2000). Will having a British citizenship (rather than Canadian citizenship) change my situation from a tax perspective?
The above would not change.
7. Will I be expected to pay UK tax on my rental property income (as we will be renting our house)?
Yes, the letting of you home would be taxable to you as a non resident

Your employer should be able to complete most of the filings for you with the exception of your letting. You will want to go over your information with your tax agent as this is all basic information.
Customer: replied 3 years ago.

Hi,


 


Thank you for the response. I have the following clarification queries re: your response to questions (1) and (2).


 


1.You mention I'll be considered a non-resident as long as my days in the UK are not over the limit (91 days in any year for 4 years). However, looking at the HMRC statutory residency test guide, whilst it says I should "spend fewer than 91 days in the UK", it also says I should "not work in the UK for three hours or more on more than 30 days". This additional statement implies I can only work a maximum of 30 full days per year (not 90). For the remaining 60 days, I can only work less than 3 hrs per day - which is hardly practical. Please can you advise.


 


2. To confirm my understanding, if I exceed the 90-day limit per year does this mean I will be considered a 'resident' and hence must pay UK tax on all of my earnings - regardless of the number of days worked in UK or N. Cyprus? Or will I be obligated to pay UK tax only on the part of my earnings allocated to the UK-based work.

Expert:  TaxRobin replied 3 years ago.
On number 1 that is correct, the days in the UK are just any days but the working days are what you state. It may not be practical but it is the requirement for those that wish to be seen as not resident and therefore not taxed on the income.
On number 3, if you exceed the days in the UK you could be deemed resident because of the time still in the UK and working for the UK company, and a home in the UK (yes, I remember you are letting that).
Customer: replied 3 years ago.

Thanks. One last question. I didn't mention my company also has an office in Cyprus. If I transfer to the Cyprus office (but still travel to UK, based on the info I've provided) - does this make any difference to my tax status?

Expert:  TaxRobin replied 3 years ago.

It will make a difference in that the PAYE will not happen in the UK for you but the tax residence will not change and you will still need to report the rental.

The Cyprus company can still pay for your travel.

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