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bigduckontax, Accountant
Category: Tax
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I am going to work for over 6 months in the Philippines and

Customer Question

I am going to work for over 6 months in the Philippines and being paid by a non UK company.

Which is better tax wise, going as an individual or through my limited company?
Submitted: 4 years ago.
Category: Tax
Expert:  bigduckontax replied 4 years ago.
Hello, I'm Keith and happy to help you with your question.

Presumably you are a UK citizen resident and domiciled in the UK. The test rule is 91 days in the UK and you will probably exceed this. In that case your income world wide will be subject to UK taxation. There exists a double taxation treaty with the Philippines and any tax deducted locally is allowable as a tax credit against your UK liability.

Depending on the level of income you are going to be taxed at 20%, 40% or 45% by the UK. If you put it through your limited company then the Corporation Tax (CT) rate would be only 20%, but then as soon as you start paying yourself a salary from that then the same personal Income Tax problem arises. You could keep your income lower by this method, but then the profit remaining in the company would still suffer a 20% tax charge. If, of course, the company has brought forward losses the whole ball game changes and you don't have to worry so much about the CT liabilities.

I hope I have helped in this brief canter through the possibilities.