Overseas Earnings (Kuwait)

Blind_Faith_2

Ok, firstly sorry if this question is in the wrong section, but it seemed most appropriate to my eyes.

I may have an opportunity for work in Kuwait for 4- 6 months ( the employers estimate of the time needed) They have stated that they would pay me in local ( Kuwait) currency and not tax me the on the earnings locally either.

I am British and normally resident 100% of the time in the UK. This is my first overseas contract. The employer is a Kuwait company. I would be self employed for the purposes of the contract.

My questions:

Will I be liable to UK tax on this income - wholly or in part?
Any recommendations to minimise any liability for UK tax (if appropriate)?.

Many thanks in advance for your assistance -particularly if the answer is complex!

B.F.

fengirl_2

Yes, you will be liable to UK tax on your earnngs frm this contract as you will not be out of the UK for a complete tax year. You need to make sure you keep full records of all your expenditure in relation to this contract to enable you to draw up accurate accounts at the end of the year.

BritRael

fengirl wrote: »

Yes, you will be liable to UK tax on your earnngs frm this contract as you will not be out of the UK for a complete tax year. ...

I agree, earnings will be liable for this short period out of the country.
However, is the requirement of a complete tax year correct? I have been in the Middle East for 20 years and my understanding is this:- to be 'non-resident for tax purposes' we are allowed a maximum of 180 days in the UK in any one tax year, providing we average 90 days per tax year over a rolling 3 year period (the so-called 90-day rule).
I have had contracts where my rotation gave me a little too many days off (if thats possible ) so I just took a vacation somewhere away from the UK. I have also had contracts where I couldn't even get back to the UK for 3 weeks a year let alone 3 months! Hopefully, never again

These short-term contracts are a real pain tax-wise, and were made worse a few years ago when the rules were changed to be inclusive of the tax year as opposed to a calender year. This effectively means that if you leave today you'll have to be there almost 2 years to qualify. If they are offering a really good salary (less tax), then go for it. Good luck

fengirl_2

You are already non-resident, so the rules you outline apply to you.
The OP is UK resident and will remain so.

Blind_Faith_2

fengirl wrote: »

Yes, you will be liable to UK tax on your earnngs frm this contract as you will not be out of the UK for a complete tax year. You need to make sure you keep full records of all your expenditure in relation to this contract to enable you to draw up accurate accounts at the end of the year.

Many thanks for your answer fengirl. It was as I suspected. I will do as you suggest regarding records.

BritRael

fengirl wrote: »

You are already non-resident, so the rules you outline apply to you.
The OP is UK resident and will remain so.

Correct. I was just giving additional info in case he got a longer-term offer.

Could you give more details on the 'complete tax year' requirement?

Cook_County

You can find HMRC's view in HMRC 6 here: http://www.hmrc.gov.uk/leaflets/c9.htm

Do be aware that HMRC 6 is only guidance and is incorrect on law in several places - so if your returns are audited the Courts may not agree with HMRCs views even if you follow HMRC 6 exactly.