Moving abroad, will keep uk based company job & bank account - can i get a tax cut?

seanjm12345

I'm moving to spain at the end of march. I work as an editor for a Uk based company & from home and as such will be keeping my current job.

I heard today that it might be possible that I can write to the tax man and get either a rebate / pay less tax. I'm paid via PAYE.. is this possible or nonsense? I'll be living abroad in spain for at least a year and will be there before the new tax year starts

If so, any idea which form etc i need to fill out?

Thanks

Sean

Spidernick

There are many variables, including how many days you will spend in the UK each year and how many work days as starters. You may become tax resident outside the UK and so eligible for a 'No Tax' code, but don't forget you'd be liable for Spanish taxes (and potentially they might want to tax things like employer pension contributions, that aren't taxed in the UK - unlikely but possible), so it's not a win/win. You also need to consider the social security aspect and whether you would be required to move to Spanish social security (which you probably wouldn't want to do) or if an A-1 would be required to keep you in the UK scheme.

Does your employer know what you are doing? Potentially this could cause problems for them around a 'Permanent Establishment' in Spain (which could have tax implications for the employer), an obligation to withhold Spanish taxes at source, etc. (with penalties for non-compliance). It can be a minefield, so if not discussed and cleared by your employer I would recommend you do this before taking the final step. Really if you were going to do this you should go out there on a proper expat package, as if not it could open up the proverbial can of worms.

Hope this helps.

CKhalvashi

Spidernick wrote: »

Does your employer know what you are doing? Potentially this could cause problems for them around a 'Permanent Establishment' in Spain (which could have tax implications for the employer), an obligation to withhold Spanish taxes at source, etc. (with penalties for non-compliance). It can be a minefield, so if not discussed and cleared by your employer I would recommend you do this before taking the final step. Really if you were going to do this you should go out there on a proper expat package, as if not it could open up the proverbial can of worms.

This is the most important part.

There is, however, the option of you contracting through your own limited company in Spain, however this again could cause significant issues if your employer is your only client.

I'm in the process of returning to Russia at the moment (although how permenant this will be, I don't yet know), and our accountant is having a nightmare streamlining the company for tax, whilst keeping the situation acceptable to our own clients.

missile

seanjm12345 wrote: »

I'm moving to spain at the end of march. I work as an editor for a Uk based company & from home and as such will be keeping my current job.

I heard today that it might be possible that I can write to the tax man and get either a rebate / pay less tax. I'm paid via PAYE.. is this possible or nonsense? I'll be living abroad in spain for at least a year and will be there before the new tax year starts

If so, any idea which form etc i need to fill out?

Thanks

Sean

You do not choose where you are tax resident. Phone / write to HMRC and advise them of your change in circumstances. You should complete this form https://www.gov.uk/government/publications/income-tax-leaving-the-uk-getting-your-tax-right-p85


Depending on precisely when you leave the UK and how long you plan to stay in Spain you may receive a tax rebate for 2014, but you will be liable to declare your income and pay tax in Spain.


You will need to complete and present a 037 form. You will need an NIE number and declare yourself self employed and pay into Spanish health care system. You will need to complete and present a registration document at the town hall. You will then be liable for fixed monthly payments, which must be paid even if you have zero income.

Spidernick

I didn't mention the P85, as the instructions say not to complete this if you normally complete a Self Assessment tax return, so it might not be appropriate.

JasonPr

First of all, you have to work out whether you will become UK non-resident. Look at the Statutory Residence Test at https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt in particular the 3rd automatic overseas test. It requires a lot (daily) of recording keeping.

Regarding social security: take a look at https://www.gov.uk/national-insurance-if-you-go-abroad
"If your UK employer sends you to work abroad temporarily (for up to 2 years) you might have to carry on paying National Insurance - you won’t have to pay social security contributions abroad."