Liability to UK income tax when returning to UK?

burnsguitarman

I hope someone can offer advice? Last summer my son went to live and work abroad, he was expecting to be there for 2-3 years so filed a P85 with the tax office. However he is now planning to return earlier than this: perhaps June?

He had paid PAYE on his earnings before he left, which has not been refunded.

Now he is worried that he may have a liability to UK tax if he returns before he has completed at least 1 complete tax year( which will not be until April 2010). I don't understand this at all and can't find any info on it without paying.

He has been earning money in a tax free country and sending money back to his UK current account to pay loans and credit cards he left behind.

He has no savings or property in the UK, so how can he owe tax?

fengirl_2

Your son is right - if he is not absent from the Uk for a complete tax year, he remians resident for tax purposes and is liable to tax on his worldwide income. He has a personal tax free allowance for the year to offset against this and he would probably get credit for overseas tax paid (although in his case, it looks as if he hasn't paid any). His tax liability is based on what he has earned, not on what he has remitted to the UK, or, indeed, what he has in the bank.

burnsguitarman

OMG,I had no idea about this!

This is terrible news, do you know where we can get more info on this please?

fengirl_2

www.hmrc.gov.uk and search for working abroad.
Always better to owe the tax man than have him owe you!

zebedy

I think you're allowed to spend some time in the UK and still be non-resident though, something like 183 days.
So as long as he doesn't come home 183+ days early then he should still be able to claim non-residency.

However please check this thoroughly on hmrc website as I may not have it quite right

burnsguitarman

This is getting more and more confusing, I have telephoned the tax office for advice, but I'm seriously worried now!

fengirl_2

In order to be regarded as non resident, you have to be absent from the UK from 6 Apr to 5 Apr. I would say your query is too specialist for HMRC call centre staff.
Why ask a question on this board if you are not going to accept the answer?

Debt_Free_Chick

If he returns to the UK and it turns out he owes tax on the money he earned whilst abroad, then I would have thought that this would all be taken care of through his tax code, provided he works before 6 April.

Even if he doesn't start work until after 6 April, I would imagine his code for next year would be adjusted so that he pays the arrears in tax from this tax year.

It might not be as bad as you think!

burnsguitarman

Fengirl I had already rang hmrc before posting on here and I'm still waiting for a return call!

Surely you don't expect me to not want other advice and opinions other than yours.

max2009

I thought you are classed as a non-resident if 'your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years.'?

burnsguitarman

Fengirl I have sent you a PM