Paying no income tax?

Bes

Bes

Bes

Soldato
Joined
18 Oct 2002
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Location
Melbourne
Hi

I hear there is a way you can effectively pay zero income tax if you spend more than a certain number of days a year outside the UK (even if you are paid in the UK)... Is this true and does anyone have details?

Thanks
 
Yes, it is true. I believe BigStan qualified this year as he's been down Egypt way most of the year.

Can't remember how much of the year you need to be away for though.
 
I see.

Well I estimate I spent about 20 days of 2007 in the UK, I just cannot find any info on the IR website or anything. Should I perhaps talk to an accountant?
 
Bes said:
I see.

Well I estimate I spent about 20 days of 2007 in the UK, I just cannot find any info on the IR website or anything. Should I perhaps talk to an accountant?
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Perhaps you should.

It's quite a complex area. The Revenue guidance is in IR20. Start there and see where it gets you.

</trainee tax adviser>
 
You have to spend less than 91 days in the tax year inside UK. You have to prove that you are not ordinarily resident, i.e. intend or to have the intention to stay out of the country (even if you don't).

I moved to China in October 2002, and returned December 2003. Unfortunately, this was not enough time to claim my tax back during this period, as the tax year covers April 06 to April 05. So I had to spend another week outside UK (I actually stayed with my brother in Jersey). I managed to stay 90 days in the country during that tax year by 1 day, and managed to get all of my tax paid back. I had intended to return to China straight away, but didn't as my company went bust. I left UK anyway a few years ago, and now live in China permanently, so no longer pay UK tax.

My brother and his wife talked me through it all, as they are both accountants. It is hugely confusing, and I would suggest getting an accountant involved if you think you have a chance of reclaiming the tax.

There are links on the website, together with all the forms you need, but don't have links at the moment as not at home. Also, once you calculate your tax manually, you'll have to fill out your own tax forms for the next couple of years manually.

*Edited to correct misleading typo!!
 
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Interestingly enough, I was told it was 182 days when I spent my 6 months in the US. I therefore spent 181 days in the US and paid full UK income tax and zero US tax, whilst remaining on the UK payroll.
 
growse said:
Interestingly enough, I was told it was 182 days when I spent my 6 months in the US. I therefore spent 181 days in the US and paid full UK income tax and zero US tax, whilst remaining on the UK payroll.
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I think you are closer, i thought it was 6 months as a dad of a friend who works for the government and does work for the Navy often spent time aboard. A few years ago he went to France for a day just to qualify as he was a day short.
 
Sorry for the typo above. I did indeed mean 'you can spend a maximum of 90 days in UK in one tax year'. Had I spent longer than 90 days, I would not have been able to claim my tax back. I was officially deemed 'Not Ordinarily Resident'. I found the form at the hmrc website : http://www.hmrc.gov.uk/forms/r105.pdf

Not ordinarily resident
A person may be regarded as not ordinarily resident in the UK if
• their home, employment and centre of life has always been abroad, and
they visit, or intend to visit, the UK only for short periods – for example on holiday or irregular business visits which average less than 91 days a tax year, or
they have come to the UK to work or live and intend to stay here for less than 3 years, do not own (or hold on a lease of three years or more), accommodation here for their use, and on leaving the UK intend to visit only for short periods which will average less than 91 days a tax year or
they have come to the UK for a period of study or education and intend to stay here for less than 4 years, do not own (or hold on a lease of three years or more), accommodation here for their use, and on leaving the UK intend to visit only for short periods which will average less than 91 days a tax year.

• they are a former UK resident, and
they have left for permanent residence abroad, and their visits to the UK average less than 91 days a tax year, or
they are currently working full-time abroad under a contract of employment, and both their absence from, and employment outside the UK will last at least a full tax year and their visits to the UK aver age less than 91 days a tax year, or
they accompany or later join their husband or wife, who is working full-time abroad, and meets the conditions for being not ordinarily resident, their absence from the UK will last at least a full tax year, and their visits average less than 91 days a tax year.

Whether a person is ordinarily resident or not ordinarily resident in the UK depends on all their particular circumstances. The above notes are for guidance only.
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Can't remember how it relate to the tax you pay depending on how many days you spend in the UK as it varies on where work is carried out, who pays you etc, but there are 2 ways to determine residency;

1) If you spend more than 183 days here in one tax year

2) The "Habitial and Substantial test", that is

Habitual; it they continue for 4 consecutive tax years

Substantial; If they average more than 91 days over the tax year, with the average taken over a maximum of 4 years.

You are treated as resident from the 5th year unless it is clear from the outset that you intend to make H&S visits from the out set.

Then ordianry resident is if you are resident on a regular basis.
 
Get an accountant they really aent that expensive if you find a good local one, anyone that does anything self employed should at least have a chat with one even if they want to do their own returns, the money they can shave off will usually pay their bill anyway.
 
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