Expat? 90 Day Rule? Nope, you're Fecked!

[jshell]

Mods, please leave in N, P & E for a while to get decent exposure, this is a huge blow to many folks working overseas, but UK based! You're liable if you have so much as a UK bank account, residence, business interests or many other tenuous links!



As of legislation planned for March, if you're a British expat, you're liable for tax - regardless of how many days spent outside the UK:

I asked for comment from my accountant.

Brief answer for employed staff follows:

"Under the new guidelines from HMRC you are UK resident. You could avoid this if you didn't have accommodation available for your use in the UK and you didn't have children attending UK schools. The clients I have who have flexibility are either operating through UK companies (and paying 21% tax) or establishing residence in alternative jurisdictions. These options aren't available to you as you have a job.

Moving funds offshore won’t solve your problem as you are taxable on your worldwide income. This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

[Bing o]

Fan-fking-tastic. I am doing my utmost to leave this sthole, and to avoid paying even more tax as a result of the mismanagement of this country by people who I never voted for.

Looks like I will be selling up everything and never setting foot in this sthole again, if it means I avoid giving Winky any more tax.

[andy_s]

Is there any link to the new legislation at all?

[GT03ROB]

jshell said:

Mods, please leave in N, P & E for a while to get decent exposure, this is a huge blow to many folks working overseas, but UK based! You're liable if you have so much as a UK bank account, residence, business interests or many other tenuous links!



As of legislation planned for March, if you're a British expat, you're liable for tax - regardless of how many days spent outside the UK:

I asked for comment from my accountant.

Brief answer for employed staff follows:

"Under the new guidelines from HMRC you are UK resident. You could avoid this if you didn't have accommodation available for your use in the UK and you didn't have children attending UK schools. The clients I have who have flexibility are either operating through UK companies (and paying 21% tax) or establishing residence in alternative jurisdictions. These options aren't available to you as you have a job.

Moving funds offshore won’t solve your problem as you are taxable on your worldwide income. This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

Is this a reaction to the BA pilot who went to court last year?? He was really bending the rules to breaking point, by working from the UK but claiming he was actually resident in South Africa & commuting to the UK for work & as such HMRC could in this case take into account the following factors:

- he retained a house in the UK;
- he was on the electoral roll in the UK as a resident;
- post was sent to him at his UK address;
- he kept a car in the UK;
- he had a bank account in the UK into which his salary from British Airways was paid;
- he was registered with a dentist in the UK;
- he was a member of the professional body of the British Airline Pilots Association.

The case resulted in a person probably needing to demonstrate a "distinct break" in their pattern of life

[Hedders]

Bing o said:

Fan-fking-tastic. I am doing my utmost to leave this sthole, and to avoid paying even more tax as a result of the mismanagement of this country by people who I never voted for.

Looks like I will be selling up everything and never setting foot in this sthole again, if it means I avoid giving Winky any more tax.

This is the way i have been thinking, but i still like the UK so i might just become a pikey instead and have a permanent holiday here, or maybe destroy my passport and pretened i am an east european refugee. There are ways to get out of paying taxes in the UK

[onlyarenault]

As far as I can tell, the legislation is still in place that states -

You are treated as non resident if you are working full time abroad for a full tax year.


You are also treated as non resident if you do not come to the UK at all in the tax year.


You cease to be non resident if you are in the UK for more than 182 days in any tax year or on average more than 91 days over the last 4 years.


The recent court case decided that the bloke was resident because he was relying totally on the 91 day rule and hadn't given up his links to the UK. He wasn't using the working abroad defence.


I would be interested in the details of the new legislation that contradicts this, if you have it?

[GT03ROB]

onlyarenault said:

As far as I can tell, the legislation is still in place that states -

You are treated as non resident if you are working full time abroad for a full tax year.


You are also treated as non resident if you do not come to the UK at all in the tax year.


You cease to be non resident if you are in the UK for more than 182 days in any tax year or on average more than 91 days over the last 4 years.


The recent court case decided that the bloke was resident because he was relying totally on the 91 day rule and hadn't given up his links to the UK. He wasn't using the working abroad defence.


I would be interested in the details of the new legislation that contradicts this, if you have it?

There is no change in legislation from what i can tell. This "new test" is aimed at those people who have contracts of employment in the UK but are claiming non-residency, eg: this pilot.

[Asterix]

I should be ok then - we have a house in the UK but it was bought purely for investment and is rented out. I have a UK bank account but this solely for the purpose of servicing the mortgage on said house and any landlord obligations.

I've lived outside of the UK for over 6 years and rarely visit.

[jshell]

This sums the ruling: http://news.bbc.co.uk/1/hi/business/8519803.stm

[Soovy]

You see, this is what happens when this government takes an example, say bankers, and attackes them in the media, with uninformed public support.

Once it's got the great unwashed thickos on its side, it starts on YOU!

[Lost soul]

jshell said:

This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

So even if you lived full time in another country a Yank would have to pay US tax on top of what the country of residence charge , that can not be right

Edited by Lost soul on Tuesday 9th March 12:16

[jshell]

Lost soul said:

jshell said:

This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

So even if you lived full time in another country a Yank would have to pay US tax on top of what the country of residence charge , that can not be right

I'm overseas right now where all of my American colleagues who live here pay US tax - or they are 'audited' upon return to the US. Unless they give up US citizenship.

Edited by jshell on Tuesday 9th March 12:18

[Lost soul]

jshell said:

Lost soul said:

jshell said:

This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

So even if you lived full time in another country a Yank would have to pay US tax on top of what the country of residence charge , that can not be right

I'm overseas right now where all of my American colleagues who live here pay US tax - or they are 'audited' upon return to the US. Unless they give up US citizenship.

Edited by jshell on Tuesday 9th March 12:18

So you pay tax twice !!!!

[GT03ROB]

Lost soul said:

jshell said:

Lost soul said:

jshell said:

This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

So even if you lived full time in another country a Yank would have to pay US tax on top of what the country of residence charge , that can not be right

I'm overseas right now where all of my American colleagues who live here pay US tax - or they are 'audited' upon return to the US. Unless they give up US citizenship.

Edited by jshell on Tuesday 9th March 12:18

So you pay tax twice !!!!

Not quite....US & UK citizens get a credit against home country tax for the tax they paid overseas. You don't pay tax twice. US citizens actually also get extended tax free allowances provided they do 12 months out of the country. I believe it was around $100k

[Eric Mc]

Most developed countries have what are called Double Taxation Agreements (DTA) which prevents the same income from being taxed more than once. The country which retains the tax will be the country in which you are deemed to be Tax Resident.

[Arnold The Bat]

Lost soul said:

jshell said:

Lost soul said:

jshell said:

This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

So even if you lived full time in another country a Yank would have to pay US tax on top of what the country of residence charge , that can not be right

I'm overseas right now where all of my American colleagues who live here pay US tax - or they are 'audited' upon return to the US. Unless they give up US citizenship.

Edited by jshell on Tuesday 9th March 12:18

So you pay tax twice !!!!

I believe that also happened to all the Poles who came over after 2004. They were paying UK tax and also had to pay tax to the Polish government. I can't remember the details as I only took a passing interest in it but I do seem to remember there were some protests and I think the Polish government either backed down completely or significantly lowered the tax it was taking.

[Fittster]

jshell said:

if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

Not sure if the following became US law:

"The U.S. government is about to close off the last refuge for Americans who seek to escape the clutches of the IRS.

Every year, a few hundred Americans take the fateful step of surrendering their U.S. citizenship to avoid paying U.S. taxes. Many of them already live abroad, and are subject to U.S. law which — almost alone among the world's nations — taxes the income of its citizens no matter where they live or where they earn that income.

Now, buried within a bill furnishing tax benefits for soldiers and veterans is a provision that amounts to an "exit tax." As explained by the Wall Street Journal, the law will "that will tax the assets of those who leave for good on their way out the door, as if they were selling those assets."

But wait, there's more! In what looks like a hideous application of retroactive law, ex-U.S. citizens who die and leave their assets to heirs who retain their citizenship will find those assets taxed at 45% — the gift-tax rate.

And it gets still worse. The law applies not only to U.S. citizens, but also anyone who's been a permanent resident longer than eight years. (Call this one the Foreign Investment Discouragement Clause.)"

[Hitch78]

GT03ROB said:

onlyarenault said:

As far as I can tell, the legislation is still in place that states -

You are treated as non resident if you are working full time abroad for a full tax year.


You are also treated as non resident if you do not come to the UK at all in the tax year.


You cease to be non resident if you are in the UK for more than 182 days in any tax year or on average more than 91 days over the last 4 years.


The recent court case decided that the bloke was resident because he was relying totally on the 91 day rule and hadn't given up his links to the UK. He wasn't using the working abroad defence.


I would be interested in the details of the new legislation that contradicts this, if you have it?

There is no change in legislation from what i can tell. This "new test" is aimed at those people who have contracts of employment in the UK but are claiming non-residency, eg: this pilot.

Time for a non-UK contract of employment then hey?

I have reviewed this recently and for the vast majority of us expats, living and working overseas and visiting the UK maybe once or twice a year, nothing will change. It is those who previously benefited from playing the game who will suffer through the closure of what is effectively a generous loophole.

[GT03ROB]

Hitch78 said:

GT03ROB said:

onlyarenault said:

As far as I can tell, the legislation is still in place that states -

You are treated as non resident if you are working full time abroad for a full tax year.


You are also treated as non resident if you do not come to the UK at all in the tax year.


You cease to be non resident if you are in the UK for more than 182 days in any tax year or on average more than 91 days over the last 4 years.


The recent court case decided that the bloke was resident because he was relying totally on the 91 day rule and hadn't given up his links to the UK. He wasn't using the working abroad defence.


I would be interested in the details of the new legislation that contradicts this, if you have it?

There is no change in legislation from what i can tell. This "new test" is aimed at those people who have contracts of employment in the UK but are claiming non-residency, eg: this pilot.

Time for a non-UK contract of employment then hey?

I have reviewed this recently and for the vast majority of us expats, living and working overseas and visiting the UK maybe once or twice a year, nothing will change. It is those who previously benefited from playing the game who will suffer through the closure of what is effectively a generous loophole.

Hopefully this is the case, although I suspect that HMRC will over time force through taxation of worldwide earnings. The UK remains one of the few countries to have this concept of non-res. The cars in my garage are a small percentage of the money that successive governments would have pissed up the wall had this been in force.

[methodwares]

GT03ROB said:

Lost soul said:

jshell said:

Lost soul said:

jshell said:

This is the same basis that the USA operates, i.e if you have a US passport you pay US tax, wherever you live. We expect the UK to enshrine this in legislation in March."

So even if you lived full time in another country a Yank would have to pay US tax on top of what the country of residence charge , that can not be right

I'm overseas right now where all of my American colleagues who live here pay US tax - or they are 'audited' upon return to the US. Unless they give up US citizenship.

Edited by jshell on Tuesday 9th March 12:18

So you pay tax twice !!!!

Not quite....US & UK citizens get a credit against home country tax for the tax they paid overseas. You don't pay tax twice. US citizens actually also get extended tax free allowances provided they do 12 months out of the country. I believe it was around $100k

It's $91k this year, goes up a few $k each year, but I'm usually right on the threshold so need to get creative with my earnings to avoid it. So anything above the 91k + standard deductions will be taxed. The worse part I find is they want to know about any bank accounts or investments worth over $10k so they can monitor it.