Working Abroad

WelshPianist

I have recently moved from the UK to Bahrain to take up a teaching position. This is my only income and it goes into a Bahrain bank account so I don't pay tax on it while I'm
living here.
I'm wondering would I need to declare this income and pay tax on it once I return to live in the UK when I transfer the money over to a UK bank account?

Penguin_

From memory it all boils down to if you are a UK resident.  

You’re automatically 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

You’re automatically non-resident if either:

• you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
• you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

WelshPianist

Penguin_ said:

From memory it all boils down to if you are a UK resident.  

You’re automatically 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

You’re automatically non-resident if either:

• you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
• you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

So I may need to declare and pay taxes for 2020-21 as I didn't move here until October but won't need to declare for 2021-22 because I'll be spending the entire tax year in Bahrain?

eskbanker

You really need to read up on determining tax residence and exactly what this means for your income in each tax year - the above wording is taken from https://www.gov.uk/tax-foreign-income/residence and plenty more info is provided there.

WelshPianist

This is where I need assistance. It states:

You’re automatically resident if either:

• you spent 183 or more days in the UK in the tax year - My original flight date was supposed to be August 1st meaning I would have spent 118 days in the UK but due to Covid, which caused delays in VISA applications, I wasn't able to fly until October 15th meaning I actually spent 192 days in the UK.
• 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 - My only home was not in the UK given I moved to Bahrain but I did live in my parent's home in the UK for at least 91 days and spent at least 30 days there in the tax year.

You’re automatically non-resident if either:

• you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years) - I definitely spent more than 16 days in the UK
• you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working - I do work abroad full time now but I didn't spend fewer than 91 days in the UK and more than 30 of them were spent working.

NottinghamKnight

So you are resident on the basis of the first bullet point for this tax year, and would become non resident next year assuming things don't change. You used to be able to be non resident from the date you left, ie it didn't have to be full tax years, this is what I did when I worked in Hong Kong in the late nineties, but the law has changed. 

eskbanker

NottinghamKnight said:

So you are resident on the basis of the first bullet point for this tax year, and would become non resident next year assuming things don't change. You used to be able to be non resident from the date you left, ie it didn't have to be full tax years, this is what I did when I worked in Hong Kong in the late nineties, but the law has changed. 

The concept of split years is still very much part of the equation, and is explained at the link I posted earlier....

WelshPianist

NottinghamKnight said:

So you are resident on the basis of the first bullet point for this tax year, and would become non resident next year assuming things don't change. You used to be able to be non resident from the date you left, ie it didn't have to be full tax years, this is what I did when I worked in Hong Kong in the late nineties, but the law has changed. 

I've just been made aware of 'exceptional circumstances':

• are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
• find yourself advised by official Government advice not to travel from the UK as a result of the virus
• are unable to leave the UK as a result of the closure of international borders, or
• are asked by your employer to return to the UK temporarily as a result of the virus

As I was unable to leave the UK on the 1st August through no fault of my own (closure of international borders and delays in visa application coming through, which meant I was unable to fly), my circumstances may be considered as exceptional.

WelshPianist

eskbanker said:

NottinghamKnight said:

So you are resident on the basis of the first bullet point for this tax year, and would become non resident next year assuming things don't change. You used to be able to be non resident from the date you left, ie it didn't have to be full tax years, this is what I did when I worked in Hong Kong in the late nineties, but the law has changed. 

The concept of split years is still very much part of the equation, and is explained at the link I posted earlier....

I've just taken the Statutory Residence Test and come to the following results:

Automatic overseas tests - This would class me as a UK resident.

Automatic UK tests - Apart from 3.1 (due to 'exceptional circumstances' - the borders were only open to Bahrain nationals at this point due to Covid) - This would class me as a UK resident.

Sufficient ties test - I have a family, accommodation (I'd stay with parents if I ever went home to visit), and 90 day tie. I don't have a work tie as I now work in Bahrain.

I do qualify for Split year treatment under Case 1 - 'Starting full-time work overseas' because I would:
* be UK resident for the tax year in question (2020-21)
* be UK resident for the previous tax year (whether or not this was also a split year)

* be non-UK resident in the following tax year, because they meet the third automatic overseas test

* satisfy the overseas work criteria during a relevant period.

But even taken this into consideration, how does the Bahrain-UK double tax agreement affect my circumstances?

Johnnyboy11

You're overcomplicating things. You'll be confirmed UK Non Resident and tax-free from the day after you left the UK but only once you've worked full-time overseas for a full UK tax year and limited your days visiting or working in the UK. So 6th April 2022 is an important date for you. Repatriate before then and you remain UK Resident and liable for UK income tax on your worldwide earnings. Have a look at this KPMG SRT flowchart and also look at HMRCs RDR3 guide for Split Year treatment:

https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf

https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3

Best get professional advice on your own circumstances, it's not straightforward becoming and remaining UK Non Resident, particularly in the Middle East where job security is zero.

WelshPianist

Johnnyboy11 said:

You're overcomplicating things. You'll be confirmed UK Non Resident and tax-free from the day after you left the UK but only once you've worked full-time overseas for a full UK tax year and limited your days visiting or working in the UK. So 6th April 2022 is an important date for you. Repatriate before then and you remain UK Resident and liable for UK income tax on your worldwide earnings. Have a look at this KPMG SRT flowchart and also look at HMRCs RDR3 guide for Split Year treatment:

Best get professional advice on your own circumstances, it's not straightforward becoming and remaining UK Non Resident, particularly in the Middle East where job security is zero.

Thank you for your advice! I've already signed the contract at my current school which will take me way past 6th April 2022, so will not be repatriating before that date. If I do indeed make it past that date, does that mean I will not need to pay tax on earnings I've made since moving to Bahrain?

I regards to days visiting or working in the UK, does this include days before moving to Bahrain (April - October 2020) or only days after I've arrived?

Finally how many days must I limit my visits and working days to?