Confused about tax - living in UK while employed abroad

strangequark

Hi all,

Does anyone know anything about paying tax when you live in the UK but work for an overseas company? I'm a UK citizen and have always lived in the UK. About 6 months ago I started working from home for a company based in South Korea. I have not travelled out of the UK during this time (I communicate with my employer only via the internet). Where does this leave me with regards to tax? I assume I need to apply for self-assessment in the UK as I'm not paying PAYE in the UK - is this the same as registering as self-employed?

Currently, 4% tax is being removed from my earnings, but I assume this is being paid in South Korea, not the UK. Can I claim this back? My employer is difficult to communicate with about this as he speaks poor English.

I know I sound clueless and I'm not here looking for abuse. If anyone has any advice or can point me in the direction of a resource I'd be grateful. All the advice I can find about working abroad assumes that you're also living or travelling abroad, which I'm not.

Thanks.

RetiredInThailand

There seems to be a double-taxation treaty with Korea:
http://www.hmrc.gov.uk/taxtreaties/in-force/korea-dtc.pdf
so you should be able to deduct any income tax paid there from your liability in the UK.

Needless to say, you should declare all your worldwide earnings in the UK if you are resident in the UK.

strangequark

Thanks. Does that mean I enter all my earnings in the foreign income section of the tax return? (so that I can add a figure for the tax taken off in SK)

jennifernil

I think you need to use an "employment" page too, and note there that you are filling in the foreign pages too (if possible, not sure as my OH does paper returns).

But yes, you should put it in the foreign pages and enter the foreign tax deducted, this should reduce what you pay here.

It's not the same as self employment. Unless you are self employed and invoice the Korean company for your time? In which case you should register as self employed.

What are you doing about NI?

Some help here, follow the links.....

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10027480

especially this one....

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10026136

strangequark

I'm paid per piece of work rather than per hour (and I don't have fixed hours) - does that suggest I'm self-employed? I don't send out invoices though - they determine how much to pay me and send me an international transfer each month.

I don't know yet. I looked on the HMRC website and there appears to be a form you can fill in to pay class 2 NI and backdate it to when you started work. So I suppose I'm going to do that.

xylophone

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10026136
Declaring your overseas earnings on your tax return
You declare your overseas earnings on the employment pages of your tax return, and make any claims for tax already paid on the foreign pages.
Where to go for help
If you have any questions about your tax and your employer can't help, you can contact:
your employer's Tax Office if you've got a UK employer or an overseas employer that operates PAYE - ask your employer for details
your local Tax Office
Contact details for all HM Revenue & Customs Tax OfficesOpens new window

pjclar02

Hello there

First things first, I think you need to clarify what the relationship is between yourself and the Korean organisation. Do you have an employment contract or a consultancy contract? Armed with this information you can then move on to decide what the next steps are.

For your information, if you are an employee of the Korean organisation, you will have to set up a UK PAYE scheme and operate PAYE for yourself.

If you are self-employed, you will need to register as such with HMRC and declare your income through self-assessment. You will need the self-employment pages of the return only in this instance, as you will not be employed, and you do not have a foreign trade - all of your work is carried out in the UK.

strangequark

I don't have any kind of contract.

pjclar02

And is the amount withheld exactly 4%....or is it 4.5%?

strangequark

4% exactly.