Am I liable to pay uk tax while working in Japan

nicter

Hi
My son has been working in Japan since Feb 2010. His contract (self employed but contracted to the Japanese company) is until March 2012
Prior to this post he was self employed in the U.K and has completed self assesment tax returns until April 2010
Can anyone tell me what, if any, his tax liability to UK is for the duration of this Japanese contract ? and are there specific forms to notify the I.R ?
Thanks

Cook_County

He is domestically UK resident and taxable worldwide on his trading profits. He can claim a credit for any Japanese income tax, inhabitance tax etc on the foreign pages. The amount will depend on the level of Japanese tax and the amount of doubly taxed income.

Pennywise

For his non-UK earnings to be non taxable in the UK, he has to become non-resident, which basically means an intention to permanently leave the UK. Having an employment contract abroad for 2 years is a good sign of "permanency" but he'd also need to sever other ties, i.e. sell his house when he left, take his wife/children with him, etc etc. And of course, he has to remain outside the UK for the requisite number of days, so basically he can only come back for occasional holidays etc, which is probably the case anyway if he's working out there.

Cook_County

Pennywise - this person does not have a period that can be classified as full time working abroad for a period greater than a UK tax year. Therefore he remains UK resident from how I understood what I read in the question...

nicter

Cook_County wrote: »

Pennywise - this person does not have a period that can be classified as full time working abroad for a period greater than a UK tax year. Therefore he remains UK resident from how I understood what I read in the question...

Thankyou for your replies but not sure I understand this last post ..sorry
My son is working away continuously for 2 years so will be away for "a period greater than a UK tax year"

Londonboy_3

Hello OP

Your son will need to be working full time in Japan, have this arrangement of working full time outside the UK for at least a full tax year (6 Apr to 5 Apr) and visits back to the UK of no more than an average of 91 days per yr.

In addition, he needs to prove he has left the UK in the first place i.e. does he have a home in Japan etc. I suspect he has, as it would be a hell of a commute if he didn't.

If he passes the tests above he should be non resident so the Japan earnings are taxable in Japan and not the UK. If UK HMRC regard him for some reason as resident he should be able to get a foreign tax credit for the Japan taxes he has paid (assuming he has..)

He should complete and submit Form P85 (download from HMRC website)

nicter

Thankyou for that Londonboy. He fulfills all the above so will download the neccesary form from HRMC
Thanks again :beer: