Tax residency - covid

nick_mac

Hi All, I'm afraid that eventually I'll need to rely on a tax advisor, but I thought I'd give it a shot here first...

My employer recently told us that our VOE will be in place until the end of 2020 (at least). So, that means working from home for another 6 months. I have family in Southern Europe, and I am considering going over there. If I have to work from home, I'd rather do it from a warm place with lots of space than from a small flat in London. However, I don't want to create problems with HMRC, nor do I want to end up being liable to pay taxes in another State because I spent too much time there and became a resident there for fiscal purposes (and, I'm sure I wouldn't be allowed to do that as my employer employs me in the UK).

So, does anyone know the rules around this? Is there a max number of months that one can spend abroad before triggering any tax implications?

Thanks in advance

Jeremy535897

It is hard to lose UK residence, and easy to become resident in another country, but each country has its own rules on tax residence. If you become tax resident in two countries under their domestic law, you then have to look at the double tax agreement between the UK and the other country to see whose rules on residence take precedence, who taxes what sources of income and gains, and whether both tax them and one gives credit for the other's tax, or one just exempts particular types of income or gains. Not for the faint hearted.

[Deleted User]

The residency rules are complicated - see below:
However, on the basis, of what you have said it is likely that you will remain resident for this tax year. Be careful abroad though as brexit is complicating matters significantly (unless, like me , you are from NI and have dual citizenship). For example, in Spain there is a huge backlog for residency permits claims which you will need if you wish to stay for longer than three months.

https://www.expertsforexpats.com/expat-tax/statutory-residence-test/

https://www.immigrationspain.es/en/brexit-immigration-in-spain/

nick_mac

Thank you both, it does sound like a nightmare... I'm sure HMRC wants my money and it sounds like losing UK residence will not be a high risk.. I guess that if I end up staying overseas for long I need to make sure that under local law I don't become a fiscal resident - that's the real issue. I might try and get in touch with my HR and see what they say, although their approach would probably be to ask me to stay in London to avoid any complications and potential extra work for them.. Thanks again! 

hoc

6 months will typically cause complications, UK/HMRC tends to be far more lenient than other countries. I had 2 friends in similar situations considering spending more time in Singapore and Italy, both decided to limit to 3-4 months.

nick_mac

Thanks hoc. Although if I'm staying with family (i.e. not renting my own place there) - how do local authorities even know I'm there? Especially when it comes to the EU? I'm playing with the idea, but I'll likely keep it under 6 months to avoid any trouble.. 

Jeremy535897

nick_mac said:

Thanks hoc. Although if I'm staying with family (i.e. not renting my own place there) - how do local authorities even know I'm there? Especially when it comes to the EU? I'm playing with the idea, but I'll likely keep it under 6 months to avoid any trouble.. 

Usually as a result of ill advised social media posts.