Income from China (and self-employed?) & now looking to get a mortgage soon...

RawZ05

I left my job last year and recently started working for a new company based in Mainland China. Despite the cultural differences between UK and China, I signed a contract that enabled me to have the same/similar benefits as people working in the UK - such as 28 days of statutory paid holiday a year (incl bank holidays), sickness pay etc.

However, for the past 5 months I've been paid each month gross - i.e. tax free. They didn't tell me that I need to sort out tax my end. I just presumed things would have been done by China. Obviously not. I'm now in an awkward situation as I've never been classed as self-employed or freelance, however it seems this is what I'm going to have to class myself now.

I've applied to HMRC for Self-Assessment, but this is as far as I've gotten. I've always been employed and been on the PAYE system from the various past companies I've worked for over the last 20 years, so I'm completely new to this. What do I class myself as, Sole Trader? - I do provide a service (marketing), but is this the correct term to class myself as since I'm effectively self-employed.

Would appreciate some advice. I'm lost right now.

What makes things worse is that I was planning on getting a mortgage for a house next year. However, being self-employed (I guess), I've now got to put those plans on hold for another 2-3 years?? Since that's how things work for people who are self-employed. I don't have any years worth of SA302 forms to provide a bank. I'm going to be a first-time buyer and I had my ISA setup to the maximum (near enough) for the full govenment backed bonus, but I'm not going to be able to use it until I've got 2-3 years of self-employed income to show.

To be clear, I'm a British National living in Wales, so I'm responsible for tax in the UK.

Manxman_in_exile

I don't think you can be self-employed for tax purposes.  You sound like an employee.  Have you asked HMRC how you should approach this?

Sandtree

Firstly, speak to the company in China and confirm that they consider you an employee.

Assuming they do then you are an employee and not self-employed (aka sole trader). You will still need to register for Self Assessment but complete the Foreign Income section rather than the Sole Trader section. You can see the paper version https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/973712/sa106-2021.pdf to see what you will need.

On the Mortgage front, be aware that whilst HMRC may consider you an employee that doesn't mean a Bank will. Contractors that operate via their own professional services companies are legally directors/employees of their Ltd but Banks want the self employed sections completed (in most cases, though some consider day rate instead these days)

Marcon

RawZ05 said:

I left my job last year and recently started working for a new company based in Mainland China. Despite the cultural differences between UK and China, I signed a contract that enabled me to have the same/similar benefits as people working in the UK - such as 28 days of statutory paid holiday a year (incl bank holidays), sickness pay etc.

However, for the past 5 months I've been paid each month gross - i.e. tax free. They didn't tell me that I need to sort out tax my end. I just presumed things would have been done by China. Obviously not. I'm now in an awkward situation as I've never been classed as self-employed or freelance, however it seems this is what I'm going to have to class myself now.

I wonder else is missing from your contract - presumably you didn't take professional advice before signing it?

GeordieGeorge

Call HMRC and ask what you need to do.