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Sam
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Category: Tax
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Hello, My husband is a British national, holding a UK passport.

Resolved Question:

Hello,
My husband is a British national, holding a UK passport. We recently moved to Hungary and he is now registered here as a resident. However all his work is based in the UK for a UK company and he regularly travels back to the UK for work and personal purposes. I understand it will make him a UK tax resident and/or domicile. We are planing to move back to the UK sometime in the future.
Can he choose to pay his income tax in the UK, even if he is not spending more than 183 days there in one tax year?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

As your husbands income arises in the UK - then initially it is liable to UK tax - due to the origin on the payment.
However UK paid employees who do not reside in the UK can ask for their UK income to be treated as tax free as long as
1) they do not spend more than 90 days in the UK and
2) none of these are for main duties - so if your husband is just coming for meetings and/or training purposes, then this does not affect this.

But if any of the work carried out in the UK is more than incidental duties, and/or more than 90 days are spent in the UK, then he would be treated as resident and therefore liable to UK tax on this salary.

You do not indicate when this employment began and what the current tax position is, so I can advise further. However, if the plan is to move to the UK, then this income will be liable to UK tax based on the fact that your husband will then be treated as resident in the UK, and so liable to UK tax.
This is even he continues to travel out of the UK for work purposes, as he is a British resident and this will be where your home is situated.

Do feel free to ask any follow up questions

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13772
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Customer: replied 2 years ago.

Hi Sam,


Thank you for your answer.


He started working for the company in January 2010 at which time we were living in the UK. He has been paying his tax in the UK all this time.


Recently the company's accountant advised the company that he can no longer be on the company's payroll because he is a resident of Hungary therefor he should pay his income taxes in Hungary. This sound like an absolute nonsense to us. The work is in the UK, the company is in the UK and he is a UK citizen. It is true that he does work from home on his computer when he is in Hungary. However he wants to carry on paying his taxes in the UK, because it makes the most sense and we are planing to move back soon.

Expert:  Sam replied 2 years ago.
Hi Bernadett

Thanks for your response

It is nonsense, he can continue to be employed by a UK company, and the company should carry on deducting his tax and National Insurance under the usual PAYE procedures. Even if a code NT (No tax) as issued from HMRC to the company, this would just mean that they need no longer deduct tax - and would just deduct National Insurance for the next 52 weeks (and then if your husband wished to carry on paying UK National Insurance, for state pension and state pension purposes, then he could arrange to pay voluntary contributions)
Code NT is issued by HMRC, when a claim for non residency is made by the individual (so your husband) having completed a form P85 and meeting the requirements needed.

However, the element of truth in this, is that as a Hungarian resident - he should advise their tax department of the fact he is living in their country, in case they wish him to file tax returns, of which he would declare the income earned, and any UK tax suffered (which would be used as a credit against the Hungarian tax position) or, in the case of NT (No Tax) status having been awarded in the UK then a full tax liability would be considered by them.

Maybe this is what he meant - but this does not mean he comes of the companies payroll!

I can see you have already been in touch with the Hungarian tax office, so its their advise that matters most here as the UK tax position is clear - (and of course we are UK tax experts on this forum) so dependant on what they say - which I imagine would consider how long your husband has been a resident, from the time you moved there, until the date of your return to the UK.

I think the company accountant needs to brush up on his tax knowledge !


Let me know if you have any more questions, but it would be appreciated, if you could rate the level of service I have supplied, as this ensures I am credited for my time.

Thanks

Sam

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