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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My son started working in Dubai on May 28th last year He was

Resolved Question:

My son started working in Dubai on May 28th last year He was home for xmas for 14 days.It looks like he will be coming home on the 12th of March. Will he be liable for any tax on his earnings?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please advise if your son will be coming home for good on 12 Mar 2015
Was he living and residnt in the UK before he left for Dubai in May 2014?

Many thanks
Customer: replied 2 years ago.

He will be coming home for good and yes he was resident in UK before he left for Dubai

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your prompt reply.

Under the statutory residence test, you have to be out of the country for a full tax year in order to qualify for tax exemption from UK taxation.

You son would not have been out of the country for a full tax year. Therefore, his earnings in Dubai would be taxable in the UK, I'm afraid..

Normally, if you have suffered any tax on thoses earnings abroad, then you can claim foreign tax credit relief against foreign tax suffered. We know there is no income tax in Dubai, so this relief would not apply.

More information on Statutory Residence Test can be found here (look at Page 8)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/381705/rdr3_1_.pdf

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

So when would it be the right time for my son to return back to uK to minimise his tax

Expert:  taxadvisor.uk replied 2 years ago.

Thank you for your reply.

He should be away for a full tax year to qualify for exemption in that year.

As he did not leave the UK until 28 May 2014, he should be away until 6 Apr 2016 to cover full tax year 6 Apr 2015 to 5 Apr 2016. If he were to spend a full tax year 2015-16 abroad before returning to the UK, then for the period 28 May 2014 to 5 Apr 2015, this would be a split year and monies earned whilst abroad would be tax exempt in the UK. In addition, monies earned in tax year 2015-16 would also be tax exempt in the UK.

As his absence does not cover a full tax year outside the UK, unfortunately, all earnings are taxable in the UK.

I hope this is helpful.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.