Japanese tax. IR implications

[shirepro]

I have an employee who is taking a year out to teach in Japan. I want to keep him on my books so that he wil return to me once he has done his year, so I am getting him to continue working a bit each month for me and sending me work online. I will pay him just under the UK tax threshold. I am told his tax in Japan is about 15% on a fairly poor wage (£12,000).

Question is, when he retuirns in July 2006, what tax will he be liable for? Do they add his UK earnings to his Japanese earnings, and therefore want their 22% of his Uk earnings, or will the Japanese take it at 15%?

[thepeoplespal]

I'm not sure if Japan has a double tax treaty with the UK or not. If they have it will just a case of dealing with the UK earnings, of which someone here might be able to help you with.

[Eric Mc]

When is he leaving for Japan? If he is only going now and is coming back in July 2006, it means that he will be resident in the UK for tax purposes for both the tax years 2005/06 and 2006/07. Therefore, if you continue to pay him a salary up to 5 April 2006, he will be liable to UK tax on that salary for the 2005/06 tax year. Obviously, the amount of tax and NI deductable for 2005/06 will be dependent on the Gross Salary you decide to pay him - but it will need to take into account what you have paid him since 6 April 2005.

If he earns a salary from his Japanese job, he may have to return this income on a 2005/06 Self Assessment tax return. He might not be liable to any UK tax on it however as I'm pretty sure there is a Double Txaation Agreement between BRitain and Japan.

[shirepro]

Many thanks, he leaves July 30th and returns June 2006. For the amount of work he will do for me whilst away he will be under the UK tax and NI threshold, so I guess there is just the Japanese tax to worry about.