Tax on income from working abroad

Scoff

Hi everyone I wonder if anyone can give me a definite answer on with this... At the moment I am employed in the UK, get paid weekly, my employer deducts tax and NI off my wages, I am single and live with my mum. Earlier this year, i went to work in Spain for 2 months, where i had to send the company an invoice, I got paid in euros, into a Spanish bank account, then transferred it back to my UK bank. I read somewhere that if you spend less than (I think it was 183 days) outside the UK, you don't need to pay tax on foreign income. So i'm basically wondering if this is correct? Do I get the money i made tax free? As I am close to being 183 days outside the UK.
Thanks very much if you can help

booksurr

the phrase you need to understand is "tax resident"

You’re automatically (UK) resident if either:

• you spent 183 or more days in the UK in the tax year
• your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

I assume you spent 30 days living with your mother in the UK so you remain UK tax resident and must pay UK tax on all your earnings for that year, including your Spanish earnings.

You can then claim a credit against your Spanish earnings for the amount of any tax you paid in Spain on that - this is called a double taxation treaty to stop you being taxed twice on the same money

start here: https://www.gov.uk/tax-foreign-income/residence

tax treaty: https://www.gov.uk/government/publications/spain-tax-treaties

Scoff

Thanks very much for your reply The 183 days is clear enough, but when it says "your only was in the UK" ...I did rent a home in Spain when i was living there. Tbh i think it's just easier to pay the tax, it's not a lot of money anyway, but i didn't want to pay it if i didn't have too obviously haha

booksurr

Scoff wrote: »

Thanks very much for your reply The 183 days is clear enough, but when it says "your only was in the UK" ...I did rent a home in Spain when i was living there. Tbh i think it's just easier to pay the tax, it's not a lot of money anyway, but i didn't want to pay it if i didn't have too obviously haha

you misunderstand. You do not have a choice, you have to pay UK tax.

I have no knowledge of the Spanish tax system but google shows the "basic" rate is 24% on earnings over 12,450 Euro so if upi earned above that level I assume you will have paid Spanish tax? If that is so you declare your earnings to HMRC and they will calculate U tax at 20%

since 20% is less than 24% you will not have any UK tax to pay as the UK liability will be covered in full by the Spanish tax "credit"(probably, you need to do the sums yourself) but you must (ie illegal not to) declare those earnings to HMRC because the other phrase you need to research is tax domicile - a UK citizen (I assume you are UK born?) is always domiciled in the UK for tax purposes unless they permanently move abroad - you have not, you have been away for less than 5 years (another threshold for you to research) and so remain domiciled in the Uk and thus liable for UK tax

TheCyclingProgrammer

I'm guessing from OPs description of "invoicing" their employer in Spain, that the Spanish "employer" has treated them as the Spanish equivalent of self-employed, meaning they were responsible for declaring their income to the Spanish authorities and paying tax on it. If they had done this then as booksurr says, they would have been able to claim a credit against any UK tax due under the double taxation treaty.

However I suspect that what has really happened is OP has not declared this income to the Spanish tax authorities at all. Even though they are UK tax resident, they are still liable to pay Spanish income tax on their Spanish earnings (and also declare it as foreign income to HMRC). Spanish tax can be complicated, I don't know enough to offer any advice other than the fact that they are liable to pay Spanish income tax (and I believe as a non-resident they are not entitled to any Spanish tax allowances).

OP should at least declare the income to HMRC and pay UK tax on it.