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bigduckontax
bigduckontax, Accountant
Category: Tax
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Hi - I have a few questions related to my overseas working

Customer Question

Hi - I have a few questions related to my overseas working status.

Background:
Starting I have been in Trinidad since September and form 1st May (there abouts) my employer will pay me on an expat assignment out here; the model that is adopted is one whereby my emplyer pays hypothetical tax for me in the UK and all my tax in Trinidad (I am afraid I have no knowledge on the practicalities of hypothetical tax). Also, I am recently divorced (this may be relevant, I've no idea), as such I am looking to buy a property (with a friend) in London to rent out.

Questions:
1. Some of the money I am using for a deposit belongs to a Trinidadian friend and is in Trinidad. If we put the money into my UK account to pay the deposit, will I be liable to paying 40% on this?
2. Given the hypothetical tax status, will I have to pay 40% on the rental income recieved in the UK?

Thanks,
Terry
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello Terry, I'm Keith and happy to help you with your question.

I hope you have notified HMRC of your departure overseas on form P85. This will tell them that you have left the UK and are now resident overseas. Assuming that you do not visit the UK for more than 90 days in each tax year you will be treated as non resident.

Having got that out of the way let us look at '1.' The movement of funds to the UK does not attract tax at all. It would be best if, to avoid any doubt, it came from your friend's bank account to your bank account direct without ever passing through your hands in Trinidad.

You will have to pay Income Tax (IT) certainly on your UK rental income. Whether it is at 40% or 20% depends upon your income level in the UK which is subject to IT (hence the necessity to take P85 action). As regards XXXXX XXXXX this can be a ramp for blatant permanent removal of funds due to you which are not liable to UK tax and maybe cannot be recovered. It's a Tom Tiddler's ground for misunderstanding and complexity. The general view is that you should employ a local, trusted UK accountant to handle this matter to avoid being out of pocket.

I do hope I have helped.
Customer: replied 3 years ago.


Hi Keith,


 


Thank you for the prompt reply - I will take your advice.


 


May I just clarify one point with you: The hypo tax scenario I cannot get out of...it is the company policy and I am stuck with that. They uplift me in Trinidad to negate the tax burden.


 


So in that respect - how does the P85 notification impact that? i.e. will my company run into any difficulties because I have notified HMRC (I have not done this as yet...which I am sure you have guessed already).


 


Thanks,
Terry

Expert:  bigduckontax replied 3 years ago.
The generally held view is that it is always a good idea to take P85 action on leaving the UK to work overseas and ditto when you return. HMRC then know that you are not in the UK.

Your company will not know that you have taken P85 action, although HMRC may well change your tax code for PAYE purposes. If you are not being paid under PAYE there is no skin off your nose for that one!

As regards XXXXX XXXXX I urge you to engage a local man in the UK to investigate this highly complex area

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.

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