tax benefit by becoming non resident during maternity leave?

curehead

Hello,

my wife will be on maternity for 1 year from mid April. She gets 6 months full pay, then 6 months statutory allowance. Now, she spends her entire maternity leave abroad, and in effect becomes a non-resident, does she receive the UK income tax free? (ie taxed at whereever she becomes resident for the time?)


thanks
Curehead

fengirl_2

Yes, but she has to be absent for the whole tax year - mid April won't do.

Londonboy_3

You do also need to be moving overseas for full time employment if you are to become non resident by staying out for just 1 tax year - maternity leave may well fall foul of this rule. But as noted by the previous poster, she would need to be out for almost 24 months from mid April, even if it could be proven she has moved overseas to work full time.

So unlikely to be NR- sorry.

TobeNewDad

My wife and myself will also be leaving UK permanently on the last week of March while my wife starts her maternity leave for the full year. She will not be returning to UK and to work in the UK until mid April 2010. Please advise whether my wife is entitle to non-resident status and therefore her maternity leave income is also exempt from tax. If so, how does she get about getting this sorted. Both my wife and myself are non-dom tax status at the moment.

Tiggergirl

Technically you are still employed by your employer while on maternity leave. Whether you are in the country or not, by accepting maternity pay from an employer in the UK you are still employed by them. I think you'd have a hard time getting that pay tax free via your employer, or convincing HMRC that you should have it refunded.

Debt_Free_Chick

Tiggergirl wrote: »

Technically you are still employed by your employer while on maternity leave. Whether you are in the country or not, by accepting maternity pay from an employer in the UK you are still employed by them. I think you'd have a hard time getting that pay tax free via your employer, or convincing HMRC that you should have it refunded.

I'm not so sure ..... we have a number of UK nationals working for us in the States, who are paid from the UK. They are non-resident for tax purposes and recieve their pay without deduction for tax. In the case of our employees, they simply notified the tax office that they would be working abroad and their tax code was adjusted.

So - it might be possible.

That said, the income may be taxed in the country of residence instead/as well!

Tiggergirl

Debt_Free_Chick wrote: »

I'm not so sure ..... we have a number of UK nationals working for us in the States, who are paid from the UK. They are non-resident for tax purposes and recieve their pay without deduction for tax.

However, in this case an employee would be paid maternity pay through the payroll of a UK company, and the place of work on their contract of employment presumably would be in the UK. I reckon HMRC would see that money being earned in the UK, whether or not the employee spends her leave in the UK or not.

moppet_217

Is your wife a british passport holder or is she on a visa? If she is on a visa than leaves the country you may want to check if she is entiled to SMP. I know from experince it is vary grey area for visa holders and SMP.

TobeNewDad

Thank you all for your responses. I am on a work permit which expires in April and hence for our return. My wife is on a separate work permit from a different employer. My wife is entitled to have full pay for the first 6 months and then SMP afterward for the next 2 months or so. It sounds like all I need to do is call HMRC and let them know that my wife will be working aboard, especially we will not be in the country for the entire 2009 tax year (non-resident rules).