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bigduckontax
bigduckontax, Accountant
Category: Tax
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Dear Tax Advisor, Can you please help with the following

Resolved Question:

Dear Tax Advisor,
Can you please help with the following situation?
For the past 10 years I have worked for Schlumberger (Petroleum Industry) in Africa. The last assignment was in Nigeria, but from March 2015 I have been placed on a one year leave of absence. This was done with the intention to get me back this year, but the chances of this happening are very slim as the downturn of the industry is still ongoing.
In October 2015 my wife was transferred from Nigeria to Aberdeen by Schlumberger (she is working for the same company). For that reason my wife, me and our two children live for the past 4 months in Aberdeen.
My question: There is a good chance Schlumberger will have to let me go after my one year leave of absence is finished. In that case my employer will have to pay me a lump sum of buildup pension and a certain “let go” amount. Now, would I have to pay UK Income Tax on this foreign income?
I tried to work out if I need to pay by looking at “resident” classification and if my domicile is abroad. This guided me to the HM Revenue & Customs document called “Guidance Note: Residence, Domicile and the Remittance Basis” (Sep 2015). If I would be liable to UK tax on the remittance basis, I will have to pay tax on 1.UK pensions (N/A), 2. Income from an overseas pension that I remit to the UK (Applicable?).
So far I haven’t been able to work out if I am already a UK resident, if I am able to use the “remittance basis”, and what the full applications are.
Can you please help?
Some additional information:
I am Dutch and my wife is Italian.
My only link with the UK is currently my wife’s job, the house she rents, the schools our children go to, the UK car we drive.
Thank you in advance!
Best regards,
Alfred van der Horst
07424 708 255
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Alfred, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. Taxation on a remittance basis is great if you are a Russian oligarch with a huge overseas income. It costs you 30K per annum to use the remittance basis. If an individual spend more than 183 days in the UK in any one tax year then they are liable to UK taxation on their world wide income. The UK has a Double Taxation Treaty with Nigeria which precludes the same income stream being taxed in both jurisdictions. This is achieved by means of tax credits, any tax paid in one country being allowed as a tax credit against the liability in another. The Treaty does not, however, protect you from differences in rates of taxation. However, if you were working on oil rigs I cannot assist you at all. HMRC will not release any information for oil rig workers taxation and will treat each case on its merits. If you receive a redundancy package then the first 30K is tax free, the ba***** *****able to UK tax at your marginal rate. If you transfer your pension pot directly into an UK pension without passing through your hands then there are no taxation consequences. If, however, you liberate your pension, assuming that you are over 55 years old, then 25% of your pot will be tax free and the balance subject to Income Tax (IT) at your marginal rate. If you are under 55 then taxation on liberation could be a high as 55%. I do hope that I have shed some light on your situation.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3617
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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