Self employed & working abroad, confused about tax!

keithshaw

Hi,

I became self employed in August last year with the intention of moving to France for a while. I moved to France in December 06 and intend to stay here until the end of April 08 at least.

I've just started looking at my tax return for 06/07 and am getting really confused about what I should be putting down.

It looks like I can do a split year treatment if I am going to be classing myself as non resident because I'll be out of the UK for the whole of the 07/08 tax year. It also looks like because all the work I do is conducted in France I am not liable for UK tax on this work - if I am classed as non resident.

If I go for the split year treatment then do I get to keep everything I earn in France tax free? Or will the French come after me for tax? As far as HMRC is concerned I'm a resident of the UK, but if I can get away without paying tax on my earnings then I'd obviously do that.

I guess my question is if I declare I'm non resident in the UK, will I get away without paying tax, or should I just declare everything as if I'm living in the UK and pay the full UK tax? (I don't indend to stay in France for the 3 years all the forms talk about)

It's probably worth saying I don't expect to earn a whole load in the tax year 07/08, maybe £10-£12k, so the tax on that isn't going to be loads anyway.

It's all really complicated and I've had a good search through this forum but most 'tax abroad' style questions are based on employment not self employment.

Any help really appreciated.

Keith.

monkeymax

keithshaw wrote: »

Hi,

I became self employed in August last year with the intention of moving to France for a while. I moved to France in December 06 and intend to stay here until the end of April 08 at least.

I've just started looking at my tax return for 06/07 and am getting really confused about what I should be putting down.

It looks like I can do a split year treatment if I am going to be classing myself as non resident because I'll be out of the UK for the whole of the 07/08 tax year. It also looks like because all the work I do is conducted in France I am not liable for UK tax on this work - if I am classed as non resident.

If I go for the split year treatment then do I get to keep everything I earn in France tax free? Or will the French come after me for tax? As far as HMRC is concerned I'm a resident of the UK, but if I can get away without paying tax on my earnings then I'd obviously do that.

I guess my question is if I declare I'm non resident in the UK, will I get away without paying tax, or should I just declare everything as if I'm living in the UK and pay the full UK tax? (I don't indend to stay in France for the 3 years all the forms talk about)

It's probably worth saying I don't expect to earn a whole load in the tax year 07/08, maybe £10-£12k, so the tax on that isn't going to be loads anyway.

It's all really complicated and I've had a good search through this forum but most 'tax abroad' style questions are based on employment not self employment.

Any help really appreciated.

Keith.

UK tax will be due on income from the split year as well as some french tax. If you are working in a different country and not liable to UK tax you will be liable to foreign tax in that country. I don't know the actual figures of tax the french charge but it may be worth finding out and finding if its beneficial to you to actually pay french tax. Plus all interest recieved in UK bank accounts is still iable to UK tax.

monkeymax

Also be careful of double taxation between countries. HMC has agreements between countries. Check out HMRC.gov.uk to see if we have an agreeent with them.

keithshaw

Hey thanks for the quick reply.

I've read up a bit about the double taxation agreements etc. I think I will complete the form as a UK resident - which I technically will be for 06/07 anyway - and pay the UK tax.

I think I was trying to get away without paying tax by living abroad but the last thing I want is to get caught up in a tax investigation with the French.

I looked at French income tax rates and they are comparible to England anyway.

Thanks agian.

monkeymax

keithshaw wrote: »

Hey thanks for the quick reply.

I've read up a bit about the double taxation agreements etc. I think I will complete the form as a UK resident - which I technically will be for 06/07 anyway - and pay the UK tax.

I think I was trying to get away without paying tax by living abroad but the last thing I want is to get caught up in a tax investigation with the French.

I looked at French income tax rates and they are comparible to England anyway.

Thanks agian.

No probs, you could press thanks beneath my reply so it will get noted on my profile. Hope it helps. Unfortunately, EU countries are the worst to use for Tax avoidance.

keithshaw

Do you mean that they are the worst for tax avoidance because the tax is high/comparible to UK so it is no cheaper, or because they look for people living there but paying tax to a different country?

monkeymax

keithshaw wrote: »

Do you mean that they are the worst for tax avoidance because the tax is high/comparible to UK so it is no cheaper, or because they look for people living there but paying tax to a different country?

No its all to do with info shared between companies. Members of the EU share more info on individuals under agreements. The french are especially close to us on this front, what with the country being so easy to get to for us.