Tax and the Middle East

hoxtonbabe

Forgive me if this is posted in wrong section.

Ok, hubby is considering a job offer in the middle east which naturally is tax free. As I understand as long as he is gone for atleast a full tax year and some other conditions which he will meet there will be no tax to pay in the UK, now what we are unsure of is if say he/we left in October would that mean he would pay tax on his earnings for the remainder of the tax year. I called HMRC but they were not particularly clear on this.

Thanks in advance.

HB

fengirl_2

If he left in October 2010, he would need to be out of the Uk until at least 6 April 2012 in order to be exmpt from Uk tax on his worldwide earnings. There is no part-year liability and his personal allowance would be available to set against his UK earnings from April-Sept.

hoxtonbabe

Thanks for that, he seems to think he would need to pay tax in the UK on his middle east earnings from October 2010-April 2011, it didn't sound right to me but he was convinced...;)

Luckly for him (unless things go totally belly up) he will be out there for atleast 3years with minimal visits back to the uk

TBC15

I have an interest in this thread as I currently work overseas. I take it that hoxtonbabe’s husband would be able to reclaim some of the income tax he paid April-October.

Once established as tax exempt post 6 April 2012 would there be any liability if he returned to the UK to work mid tax year..

Does being exempt from income tax have any bearing on CGT liabilities on investments?

fengirl_2

Yes, as I said in my post, his personal allowance would be availabelefor the period Apr-Oct 2010.
Yes, if he returned to the UK before April 2012, he would lose his non-residence status and be liable to Uk tax on his worldwide income.
As I have said in your post, as a non-resident you are not liable to UK tax - of any description.

TBC15

I’m sorry I didn’t make myself clear if he returned to the UK after April 2012 in the middle of a tax year i.e. 2015 would that have any implications for the money he had earned overseas that year.

John_Pierpoint

........and the other question was how long does it take for the realisation of a capital gain on a UK based asset to become free of UK Capital gains tax ?

(Ie if the notorious Wilsons (assuming they personally own their BTL portfolio) were to retire to Dubai, could they escape CGT? Would returning to the UK a year after selling the property make any difference? Perhaps we need a Tory financier to advise?)

http://en.wikipedia.org/wiki/Fergus_and_Judith_Wilson

Cook_County

Current HMRC view is that the full time employment abroad must itself include a complete UK tax year.

CGT is caught by the 5 year rule.

John_Pierpoint

Capital gains tax is charged if a person is resident at any time during the tax year so all gains from disposals made in the year of arrival are chargeable to CGT.

By concession (ESC D2) split year treatment is available but only if the person has not been resident or ordinarily resident at any time during the 5 tax years immediately before they arrive.

If a person was temporarily non resident (for less than 5 complete tax years) then gains and losses arising during the period of non residence are chargeable in the year of return to the UK unless they relate to assets acquired while overseas.

BritRael

fengirl wrote: »

If he left in October 2010, he would need to be out of the Uk until at least 6 April 2012 in order to be exmpt from Uk tax on his worldwide earnings.....

This would only be true if in the previous two years (the OP said he would be working overseas for 3 years, and lets assume started work at the start of the tax year) he had used up his entire allowance of days in the UK. If he had any 'left over' then he could come back that number of days prior to the end of the tax year.

We are allowed a maximum of 183 days in any one year (while not exceeding an average of 90 days/year over a 'rolling' four year period: the so-called '90 day rule'). So if for example he had started work at the start of a tax year and did not return to the UK until <183 days before the end of the third tax year, he would be ok.

Cook_County

BritRael wrote: »

This would only be true if in the previous two years (the OP said he would be working overseas for 3 years, and lets assume started work at the start of the tax year) he had used up his entire allowance of days in the UK. If he had any 'left over' then he could come back that number of days prior to the end of the tax year.

We are allowed a maximum of 183 days in any one year (while not exceeding an average of 90 days/year over a 'rolling' four year period: the so-called '90 day rule'). So if for example he had started work at the start of a tax year and did not return to the UK until <183 days before the end of the third tax year, he would be ok.

This answer is not HMRCs current view and should be disregarded.