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If I work solely in the Middle East (Saudi Arabia)

Customer Question

If I work solely in the Middle East (Saudi Arabia) for say 10 months of the year but do not claim UK non-resident status, will my income from Saudi Arabia be liable to UK tax or is this income and funds sent to the UK exempt from tax under the double taxation treaty?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I'm Keith and happy to help you with your question.

The key to non residence in the UK is not to spend more than 91 days in the country in any one tax year. In my opinion you would be better off financially were you to make yourself non resident for tax purposes. When you first went to Saudi did you complete a Form P85? If you did not then you should do so immediately; fortunately the form is available on the net and can be filed on line. There is no time limit for submitting this form.

On receipt of the P85 HMRC will classify you as non resident for the tax year following your date of departure and furthermore split the tax year of leaving into two portions, one resident and one non resident. When you finally return to the UK you advise your tax office and the reverse takes place. Providing you do not spend more than 91 days in the UK each tax year then you will retain your non resident status. The 91 days can be averaged out over four tax years, but the general consensus of opinion amongst experts on this site is never to exceed the magic 91 in any one tax year.

There is a Double Taxation Convention between the UK and Saudi Arabia which would prevent the same income stream being taxed in both jurisdictions. This protects you from double taxation, but not from variations in tax rates between the two countries. As the rate of Saudi Income Tax is 0% and the UK basic rate 20% you would be far better off becoming non resident in the UK for tax purposes. The matter can be quickly remedied by means of the P85 procedure.

I do hope I have been able to shed some light on your position.

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Category: Tax
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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