Moving abroad and overlapping contracts

mcfcok27

Hi

I can't seem to find the answer to this anywhere online so thought I'd see if anybody here could help!

Basically, I'm a teacher and I'm moving to teach in China from the start of August. As is standard with teaching, even though the last day of work is the end of the summer term (July), resignations are effective from August 31st, which essentially safeguards salary in the transitionary period of August.

However, the contract at my new school starts from August 1st, which means I'll also receive a salary from them at the end of August. Because of this, does anybody know the tax implications? know that ordinarily in the UK this 'extra' month's salary would be classed as a second job for one month and taxed accordingly, but how does it work if that will technically be income earned abroad when I will be considered non-resident under split year treatment from the day of my departure?

Any help would be much appreciated!

Spidernick

I would say that your UK earnings relate to a period when you were UK tax resident, so these are fully taxable. The Chinese salary will not be taxable in the UK, as long as you stay out long enough to break residence (i.e probably until at least 6 April 2018) and you don't spend significant amounts of time back in the UK. That is the simplistic version, as the Statutory Residence Test has added quite a few layers to the residency tests:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/458559/RDR3_govuk_hyperlink__updated_078500.pdf

If you don't complete a Self-Assessment tax return then you can complete a P85 to claim back tax for 2016/17, as the way PAYE works means you are likely to be due a tax refund for the year:

http://www.taxsafe.uk.com/forms/p85.pdf

If you do file UK tax returns then you'll need to wait until the end of the year and then file a tax return on a split residence basis and get your refund that way.

In theory you could argue that the UK salary for August 2016 isn't taxable, but I wouldn't try that personally.