Contracting for UK company from UAE - non-resident

hmc279

Hi, I am leaving the UK on 26th May and moving to the UAE, and as such will be applying split-year treatment for 2023.

Up until 26th May I am getting paid via payroll and paying tax as normal. From 26th May onwards my employment contract will terminate with my employer and I will instead become contractor for a fixed period of 3 months.

The company has no presence in the UAE, I will be working fully remotely.

Given I will not be eligible for UK income tax from 26th May onwards, presumably I can be paid outside IR35 (gross) and therefore not have any income tax deducted from my pay ? 

If so, does this have to be done via a LTD company or can it be paid into my personal bank account ?

Grumpy_chap

hmc279 said:

Hi, I am leaving the UK on 26th May and moving to the UAE, and as such will be applying split-year treatment for 2023.

Up until 26th May I am getting paid via payroll and paying tax as normal. From 26th May onwards my employment contract will terminate with my employer and I will instead become contractor for a fixed period of 3 months.

The company has no presence in the UAE, I will be working fully remotely.

Given I will not be eligible for UK income tax from 26th May onwards, presumably I can be paid outside IR35 (gross) and therefore not have any income tax deducted from my pay ? 

If so, does this have to be done via a LTD company or can it be paid into my personal bank account ?

Has the company you are and will be working for undertaken a Status Determination Assessment with respect to IR35?

hmc279

It is in the process of being signed off, and I am told that it is just a formality now so can only assume they are comfortable with this arrangement.

As far as options are concerned, do I have to be paid through LTD company or can I remain on payroll as independent contractor but on an NT tax code ?

Personally I don't really care if paid through LTD company or remain on payroll - I just want to avoid paying tax up front and having to reclaim.

Apologies if asking stupid questions, have never done contract work so not 100% familiar with process

Thanks

DullGreyGuy

hmc279 said:

Hi, I am leaving the UK on 26th May and moving to the UAE, and as such will be applying split-year treatment for 2023.

Up until 26th May I am getting paid via payroll and paying tax as normal. From 26th May onwards my employment contract will terminate with my employer and I will instead become contractor for a fixed period of 3 months.

The company has no presence in the UAE, I will be working fully remotely.

Given I will not be eligible for UK income tax from 26th May onwards, presumably I can be paid outside IR35 (gross) and therefore not have any income tax deducted from my pay ? 

If so, does this have to be done via a LTD company or can it be paid into my personal bank account ?

You need to be having conversations with them about whats being proposed and also understand what your option in the UAE are based on whatever visa type you have etc.

IR35 only applies to those acting through a third party (ie your professional services company/ LTD) and so if you were a sole trader then there is no IR35 considerations.  If your current employer would be happy dealing with you as an overseas sole trader only they can answer and if you can be a sole trader in the UAE with your visa (or whatever the UAE equiv of a sole trader is) someone else will have to help you.

hmc279

Have been into a government visa office in UAE and confirmed that I can work on my spouse sponsored visa as the company I am remotely working for has no UAE presence, so am happy with the UAE side of things, just the UK tax side I need to lock down

Discussions being had at the moment with my management team so just waiting to hear - wanted to go into those discussions having some idea as to my options really

So an overseas sole trader/independent contractor is an option, presumably I would need to get a P85 form filled out as soon as I've left the UK to get onto an NT tax code for those 3 months ? Or as a sole trader/ind. contractor do I get paid gross then simply mark 0 as tax payable at end of tax year via self assessment ?

DullGreyGuy

As a sole trader you invoice them and they pay you gross.

Being a sole trader however would mean your business is in the UAE which may or may not be different if your sole client is in the UK. When filling in the P85 just remember that a self employed person they arent paying you a salary, you arent on payroll your employer is yourself etc.

The sole trader section of the self assessment doesnt ask you what income tax you've paid because its irrelevant to self employment as you dont get paid a salary. The SA itself is what calculates the tax due on the self employment. 

Jeremy535897

If neither you nor the user of your services has any presence in the UK, there is no UK tax issue surely? if you wished to use an intermediary, use a non-UK company not a UK one. There may be issues around liability that might be better if a company is used.

hmc279

I will be in the UAE and will therefore be non-resident, but the company I am working for is UK based. They have no presence in the UAE.

Jeremy535897

Sorry I misread the original post.

DullGreyGuy

hmc279 said:

I will be in the UAE and will therefore be non-resident, but the company I am working for is UK based. They have no presence in the UAE.

You are not going to be working for them... you are an independent service provider and they are your client.