Self assessment tax return and foreign income

adidas

Hello

Just having a look at things for my self assessment tax return and wondered what your thoughts were....have had a look at the forums and nothing quite as specific to my circumstance. I know I could submit the form but interested to know what might happen.

I worked away for part of the tax year 2012-13. Some of my earnings are in the UK and some in New Zealand.

I paid more tax in New Zealand than I would have otherwise done in the UK. I also paid tax on my earnings in the UK and underpaid tax for the past 2 tax years due to some benefits on my P11D.

I'm completing the online form and there's no section for foreign tax relief calculation but I've seen the paper notes. Is this done for you? I've worked out that the additional tax I've paid in New Zealand would cover the underpayment of tax I would have had in the UK. Am I able to apply the tax relief in this way? Do I need to submit a paper form or is this done for you? I also wanted to know if I might be entitled to the tax paid in the UK back. I submitted a P85 form but was told that this wouldn't be accepted and that I needed to do a full self assessment.

Some figures: overpaid tax £2,500 more than I would've done in the UK, taking into account UK + New Zealand income.
Underpayment of tax in the UK about £500.
I paid £800 of tax before going to New Zealand.
I replaced a piece of equipment related to work in New Zealand and also joined the union over there, should these be tax allowable?

I know I couldn't get the whole amount of overpayment back in New Zealand from the UK but wondered how this impacted on the rest of my income, for example, underpayments and tax already paid in the UK?

Thanks

morgani

I'm afraid normally you only get tax relief on the lower of the foreign tax suffered or the uk tax on the same income.

So you would work out what is classed as the tax suffered at source using e above method. You would then work out your income and tax due as per normal. Reduce that by any tax already paid at source and paid on account. This leaves you with the tax due to / from HMRC.

adidas

Thanks for that. Sorry for the late reply, have been away. So if I follow correctly you're saying that although I've paid more in New Zealand, this doesn't count towards my UK underpayment. But if my tax payment in the UK is too much then I may be entitled to a refund and/or be able to count this towards my underpayment of tax in previous years?

jennifernil

There are usually extra pages for "foreign income", certainly you get them if you need them in a paper return. is there not a box to tick that would bring them up?

How long were you in NZ? Presumably there is a double taxation agreement in place between UK and NZ.

My OH has foreign income from Norway, under the DT agreement, he pays tax here as this is where he lives, so any tax deducted in Norway is refunded. However his situation is different in so far as he spends very little time each year in Norway, and all payments are sent directly to our account in UK.

Would that possibly apply to your income? You would need to check what the NZ rules are.

If your expenses in NZ are deductible under their rules, then can you not claim the deduction against the NZ tax you paid?

If you do end up claiming the DT relief here, morgani is correct in saying that it is limited to the amount you would have paid here if that is less. You cannot set the excess against a UK tax underpayment.

adidas

Thanks for clarifying Jen. Yeah, the online form has the foreign sections in it as well. New Zealand does have a double taxation agreement with the UK so I won't get taxed again on my money earned over there.

I was in New Zealand 'in-between' tax years, for about 10 to 11 months with a visit back to the UK inbetween so I get counted as a tax resident in the UK.

I see what you're saying about the underpayment. That's a shame lol. Never mind. That would be another way of looking at those, will find out about that. Thanks very much for your advice.