Tax free income living abroad

Horlock

Can anyone tell me the exact conditions to receive your pay tax free if you live in a foreign country and are paid by a UK employer?

I believe it is related to the number of days spent out of the UK in any given tax year.

I assume you don't pay tax in the other country.

Does anyone know more?

withabix

183 or more days per tax year spent abroad makes you a non-UK resident for tax purposes.

You will be required to pay tax at the prevailing rates of the country where you are employed, from the 1st day you started working in that country.

Which country are you living in? (because that also affects the answer).

Horlock

withabix wrote: »

183 or more days per tax year spent abroad makes you a non-UK resident for tax purposes.

You will be required to pay tax at the prevailing rates of the country where you are employed, from the 1st day you started working in that country.

Which country are you living in? (because that also affects the answer).

At the moment, I'm still in the UK, but have an interview for a job in China. The advert says "tax free salary" and I want to check exactly what this means. Prewarned is forearmed.

withabix

The employer may well pay you 'tax free', but you will be personally liable to pay taxes due in China.

I wouldn't try to avoid it either - I don't think their prisons are very nice and they tend to remove bits of your body as a penalty for tax evasion (your head, usually!).

RetiredInThailand

withabix wrote: »

183 or more days per tax year spent abroad makes you a non-UK resident for tax purposes.

For most people it's nowhere near that simple.

http://www.hmrc.gov.uk/international/residence.htm

John_Pierpoint

There is plenty of tax law to explore by the sound of it.
A quick Google turned up this quote from the link below site:
Supplementary Individual Income Tax Rules of the Standing Committee of the National People's Congress on Punishment for Tax Evasion and Refusal to Pay Tax , effective from January 1, 1993, tax evasion is punishable by prison sentences of up to seven years and fines of up to five times the amount of tax evaded.

I suspect the Chinese have been studying how Western governments "pluck the maximum number of feathers with the minimum amount of squawking"

Hong Kong feels a bit like a giant Gibraltar in a sea of people - there might be some advantage in being nominally based in Hong Kong.

http://www.lehmanbrown.com/FAQ-Tax.htm

In theory there are more people studying English in China than there are English speakers in USA.

Those of you with a vision of mass bicycle ownership - please wind forwards 20 years.
[If you don't you might get run over by s silent electric biking female doing an effortless 25 miles an hour]

I suspect that China 2012 is nothing like Kuwait in the 1970's.

Horlock

Thank you very much all. That last link is very interesting indeed - but it does seem to say that all unpaid tax is to be collected from the FIE ie from the employer and not from the employee.

Ie if they discover further down the road that they owe money then they have to pay the tax - not me (and this also includes any penalties). Though it is certainly something I will need to pursue at interview stage.

Thanks again.

jimmo

Here in the UK it is perfectly feasible for an employer to pay its employees “tax free” but its not a magic exemption. It just means that the employer pays the bill.

http://www.hmrc.gov.uk/paye/payroll/special-pay/free-of-tax.htm

Perhaps the Chinese have a similar system.

Horlock

jimmo wrote: »

Here in the UK it is perfectly feasible for an employer to pay its employees “tax free” but its not a magic exemption. It just means that the employer pays the bill.

http://www.hmrc.gov.uk/paye/payroll/special-pay/free-of-tax.htm

Perhaps the Chinese have a similar system.

Now that makes much more sense. Ie the employer are trying to simplify the process of paying tax in various countries and explain how much I receive tax free. I have no idea what the implications of tax avoidance schemes and whether I get money back. Thanks very much.

shrinkydink

I believe in China it is ultimately the responsibility of the individual to provide monthly tax returns and depending or circumstance an annual return also. A concession can be available to just file annual returns which is what you prospective employer might be getting at.

Check with the employer - likely they will have employed overseas people before and should be able to explain the basics of what taxes you will need to pay and what your reporting requirements are.