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bigduckontax, Accountant
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My boyfriend has been working overseas since July 2012. Between

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My boyfriend has been working overseas since July 2012. Between April 2012 and April 2013 he was in the country for 120 days. Between April 2013 and today he has been in the country for 30 days so far. His company are making cut backs and he might potentially lose his job. What will happen tax-wise if this happens before April?
Hello, I'm Keith and happy to help you with your question.

Not good news I regret. The test number is XXXXX days. If you spend more than this in the UK you are subject to UK tax on all income world wide. I have assumed that your boy friend is a Brit, normally resident and domiciled in the UK.

Thus for 12/13 he will be treated as a UK resident. If he spends under the magic number in 13/14 he may be treated as not resident, but this rule only applies over an average of four years and I suspect that he is going to be treated as resident, ordinarily resident and domiciled in the UK. He is thus liable for UK tax on his world wide income.

However, all is not gloom. The UK has many double taxation agreements world wide which usually allow any local tax to the offset against any UK tax due. Again I suspect though from what you say his pay has always been distributed within the UK under PAYE.

Please don't hesitate to come back to me if my assumptions are wrong and kindly rate me before you leave the Just Answer site. I am always pleased to help.
Customer: replied 4 years ago.

Hi Keith,


 


I just wanted to check about spreading out the no. of days in the uk over a number of years. Does it have to be 4 years or can it be up to 4 years, as it would be less than 91 days a year if taken over 2 years.


 


I was really asking though about what would happen if he lost his job before April this year. His company are making cut backs and there's a chance he may have to come back sooner.


 


Best wishes,


Charlie

Charlie

This is HMRC's wording:

You're also treated as resident if you're in the UK for an average of 91 days or more in a tax year - worked out over a maximum of four consecutive years.

Unfortunately the guidance is silent upon the position of the 'maximum of four years,' but if I know HMRC they will insist on an interpretation favourable to them and apply a factor of 4 rather than 2. Your partner may be in for a dispute with HMRC in the longer term. I am pretty sure that he will be deemed as resident, ordinarily resident and domiciled for the whole period. If he comes back early he may well fail the 91 day test anyway so the whole discussion becomes academic. I did warn you initially that the news was not good. sorry. Please don't shoot the messenger.
Customer: replied 4 years ago.

Dear XXXXX,


 


I'm not shooting the messenger in the slightest, I just wanted to be absolutely clear about where we stand as we are trying to save up for a house deposit. The wording I got from HMRC was:


– total less than 183 days in any tax year, and


– average less than 91 days a tax year. This average is taken over the
period of absence up to a maximum of four years.


That's why I thought the average could be taken just from the time period that he's been away.


 


Best wishes,


Charlotte

Oh it's Charlotte, I did wonder about the Charlie! Thank goodness I bought my house in 1976 and paid off the mortgage, well loan actually as we call it in Scotland, in 1992! It must be quite ghastly saving up now.

Customer: replied 4 years ago.

Ha! Yes i do have to clarify that a lot, perhaps I should spell Charlie with two ee's... or maybe not! I had some advice about that bit of HMRC wording before, I really wish they had been correct as we would have had enough saved up! I guess we'll have a lot of tax to pay now. Oh well, back to the drawing board.


 


Charlie

I fear so; please don't forget to rate me.
AMENDMENT

delete 'Please don't forget to rate me'.
Customer: replied 4 years ago.
I'm not sure what you mean by that amendment but I went to rate you this morning and the option to do so wasn't available.
OK a site problem! I am giving you an answer which isn't, but will release the site and enable you to rate me.

The amendment was issued to remove the request for a rating in the body of the answer which I am advised is a site infringement.
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