Living Abroad for full tax year, but have UK earnings

justaddice

I am self-employed and registered as SA.

I did not return to the UK for the duration of 2011-2012 tax year.

However I have clients who pay from their UK bank account to my UK account. I then usually transfer this directly to my bank in China.

Will I be liable for full UK tax even though I am not a resident or ordinary-resident?

When I fill out my SA should I declare these earnings?

If I don't need to pay the full tax, then is there something extra I need to do, like fill out a P85 for each financial year?

Thank you for your help.

Daniel.

pjclar02

Hello Daniel

When you left the UK you should have completed a P85 at the time of departure to make HMRC aware of your situation. If you didn't do it back then, I wouldn't worry about doing it now.

If you were out of the UK for a complete tax year, and are considered non-resident, you are only liable to UK income tax on your UK source income. So, if the bank account pays interest this is liable to UK tax, or if any of your self-employment work was carried out in the UK then this would be taxable in the UK. Any rental income from renting out a UK property etc etc.

If the self-employment work was carried out overseas, the fact that the monies were paid into a UK bank account is irrelevant.

Hope this helps.

justaddice

Thank you, this really helps.

But just to clarify; I don't need to state my UK payments from UK clients on the SA? Only the net interest paid by my UK bank (which is less than a pound or 2 probably)?

Thanks again.

pjclar02

Correct - providing all of the work relating to those clients was carried on outside of the UK

Cook_County

Presumably you paid tax in China on the income paid in the UK?

justaddice

I submitted my SA online. I then called HMRC to confirm everything is ok. I then just reiterated my initial question regarding that UK payments don't need to be declared as a non-resident. They said that was correct.

However, they said non-residents should not complete the online SA, and have to use the paper SA (or use software to generate the paper SA), and return by the end of Oct.

How ridiculous is that? I have read as much as possible on HMRC about non-residency and it never once said about only the paper option should be completed. Their websites just have links to register as SA and complete SA online.

Futhermore they said I might be classes as resident if I did the SA online!


I'll call them again to try to sort this out.
Has anyone else been faced with this situation?

pjclar02

That strikes me as being nonsense! I file all my clients' tax returns online regardless of their residency status and have never had any rejections or other issues.

A taxpayer's residency status cannot be determined by whether or not they file a tax return online.

You'll probably find if you phone up and speak to someone else you will get a different answer!

bartnwood

Hello Daniel,

It is correct what HMRC have told you, that being that you may be classed as resident if you file your tax return online.

The reason for this is that if you are non resident then you have to submit a residency schedule with your tax return to inform HMRC of your residency status.

Residency schedules are not available as part of HMRC's self assessment software to file online for individuals which is why you have to file a paper tax return and submit your paper residency schedule with it.

I know it seems ridiculous but that is how it is unfortunately.

Most Accountants acting on behalf of their clients can submit residency schedules online because they will have purchased the necessary software to do so.

justaddice

I did call again, and they suggested I submit a SA109 as an amendment, otherwise my SA return may not be considered completed until they receive that.

pjclar02, I presume you use software, not the online web forms?

bartnwood

Yes SA109 is the residency schedule Daniel. It is very important that your residency is declared to HMRC each year with your self assessment tax return to protect your liability to UK taxation.

I have come across many people who unfortunately have not taken the correct steps and have found themselves facing unexpected tax demands and sometimes years later!

Many of my overseas clients were not aware of the need to do this just like yourself so at least now you are aware of this fact.

pjclar02

justaddice wrote: »

pjclar02, I presume you use software, not the online web forms?

Yes - I steer well clear of the HMRC online filing tools!!