National Insurance Due On Overseas Income

[Tim330]

I spent Jan-Apr this year working in Saudi Arabia for a subsidiary company of my employer. I was paid a gross salary and as a result have completed a self assessment for the 09/10 tax year. The self assessment mentions "Total tax, Class 4 NIC and Student loan due for 2009-10" due.
Using a few tax calculator websites it seems this doesn't include the NI I would have paid if the money had been earned in the UK.
I asked the self assessment helpline for their advice, nothing to do with them I was told. They provided a number for NI helpline. The NI helpline (0845 302 1479) has told me I need to write to them with all the details of the monies etc so they can work out what I owe. This is the 1st time I have been in this situation. Is this normal? I expected the self assessment to include everything! Appreciate any comments.

[Eric Mc]

Class 4 NI is paid by people who are self-employed>

Were you self employed?

[Tim330]

I was employed in the UK on a PAYE basis/permanent role. When I took the assignment in Saudi it was as staff for their Saudi entity.

[Eric Mc]

Tim330 said:

I was employed in the UK on a PAYE basis/permanent role. When I took the assignment in Saudi it was as staff for their Saudi entity.

How long were you out of the UK?

[Tim330]

I left on Jan 17th returned on 27th April (I realise I'll also have to complete a SA next year for the 10/11 tax year)

[Eric Mc]

So you were abroad for only 79 days in tax year 2009/10 and 22 days in 2010/11 (the current tax year).

Technically, you are subject to UK Income Tax on that income as you were a UK tax resident for all of 2009/10 and 2010/11 (subject to you NOT going abroad to work before 5 April 2011). As far as I am aware, HMRC do, by concessions, allow foreign earned salaries to be exempted from UK tax on a "per day" basis but you might need to apply for that concession.

Regarding NI, I am pretty sure that you should not have any liability to UK NI on earnings from outside the UK.

[Tim330]

Eric

Thanks for that. I believe I am fully liable for income tax on the overseas income for both years. The inland revenue made no mention of any exemption as I wasn't away for a complete tax year. However I'll have another look at this.

On the NI contributions, this is in line with what a friend told me. However I will write to the NI office with details of the monies earned as I don't want to get to retirement age & be told I'm not eligible for a pension (worst case)! Hopefully I won't have to pay the NI, this will be nearly £2k I didn't think was mine to spend.

I see from your profile your from Farnborough, I'm just down the road in Cove.

[Eric Mc]

I'm in the Cove area of Farnborough really.

[LC23]

http://www.hmrc.gov.uk/nic/work/out-ee-area.htm

Hi Tim

Saudi is a non agreement country for social security purposes. If you were employed locally in Saudi (ie, had a contract with the Saudi company and not the UK company) then you will not be liable to NIC on the earnings. If you remained employed by the UK Company during this assignment then you and the UK company remained fully liable to UK NIC.

Edited by LC23 on Wednesday 3rd November 19:34

[Tim330]

From the link

"When you must pay Class 1 NICs contributions
When you are employed abroad outside the European Economic Area, Switzerland or Social Security Agreement Countries, Class 1 NICs contributions must be paid for the first 52 weeks you are there, if you meet the following conditions:

your employer has a place of business in the UK, and
you are ordinarily resident in the UK, and
immediately before starting the employment abroad you were resident in the UK."

I worked for lets say company x UK ltd in the UK, when I was in Saudi I worked for Company x Arabia ltd & had a seperate contract of employment for my stay.

Does the statement "your employer has a place of business in the UK, and" mean that as I worked for a seperate company I am exempt? This is how I interpret it.
Also by adding "and" at the end does this mean you have to say yes to all 3 criteria to be expected to pay? I would answer yes to points 2&3

[LC23]

Tim - you would need to answer yes to all three questions for you to be liable to UK NIC. So if you were on a Saudi contract (or contract with a non UK employer) for the work then UK NIC is not due.

Edited by LC23 on Friday 5th November 16:26

[Tim330]

Thanks for that. I was definitely on a contract with a Saudi company so should be ok. I have sent my details off to the NI office, hope they don't ask me to pay. If they do I'll direct them to their website.

[LC23]

Tim330 said:

Thanks for that. I was definitely on a contract with a Saudi company so should be ok. I have sent my details off to the NI office, hope they don't ask me to pay. If they do I'll direct them to their website.

You didn't need to send anything off to them. You should have just done nothing. NICO are pretty good to be fair (well, in comparison to HMRC!). Like you say, if they start looking to raise a NIC assessment just point them to their own guidance.