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bigduckontax, Accountant
Category: Tax
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Hi, I have had a bit of a transitional year of work this

Customer Question

Hi,
I have had a bit of a transitional year of work this year which has made me confused about who I owe tax to and how much. I'm a UK citizen and was working as a graphic designer at a large company on the payroll as an employee there until July. I have an Australian girlfriend and In June decided to head over to Oz on a working holiday visa. I stayed for 6 months and decided to start Freelancing while I was there setting myself up as a sole trader. I worked for one Australian company as a freelancer while I was there, the rest of my jobs came through online freelance websites oDesk and Elance.In that time I also travelled to various countries working at events for a company based in Hong Kong who paid into my UK bank account. This year I will be back and forward from the UK to Australia. My question is who do I owe / pay tax to? I have money that I have earned in a UK account and Australian account as well as Paypal. Whats the best way for me to set myself up going forward? I haven't changed any tax details in the UK since I left, do I need to register as a sole trader in the UK too? Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
As a general rule if you are in the UK for over 183 days you are liable to UK taxation, so your departure date from Blightey is of considerable importance. Here is the guidance from the UK Gov web site:
'Work out your residence status
Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).
You’re resident if:
You spent 183 or more days in the UK in the tax year
Your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year
You’re automatically non-resident if:
You spent less than 16 days in the UK (or 46 days if you haven’t been classed as UK resident for the 3 previous tax years)
You work abroad full-time (averaging at least 35 hours a week) and spent less than 91 days in the UK, of which less than 31 days were spent working.'
You are certainly liable to Australian Income Tax and should make a return to the Australian Tax Office (ATO). You should consult with the local branch of the ATO as to your status and what steps to take. There is a Double Taxation Treaty between the UK and Australia which is designed to ensure that the same income streams are not taxed in both jurisdictions. This is achiever by means of tax credits, the tax paid to one country being allowed as credit against the liability in the other. This being essentially an UK tax advise site I cannot advise of Oz tax in detail as I am sure you will appreciate. If necessary you may need to consult a local, trusted professional.
As far as the UK is concerned you should submit a Form P85 to your tax office. On receipt HMRC will make you non resident for the tax year after your departure and split the tax year of leaving into two portions, one resident and one non resident, also. The form provides for any overpayment of tax in the departure year to be refunded. On your ultimate return to the UK you merely advise the tax office by letter and the reverse situation will apply.
I do hope that I have been able to shed some light on your tax position for you and shown you an appropriate way forward.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3605
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.

Here is a link to the form P85, I meant to put it in my original answer. It can be done at any time and this one is designed for on line submission too.

https://www.gov.uk/government/publications/income-tax-leaving-the-uk-getting-your-tax-right-p85

Small amendment to my first post: paragraph 11, line 4; delete 'of,' insert 'on.'

Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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