Tax

[RAZZELL]

A hypothetical situation:

A UK national runs a business, with a WP in Thailand, working for UK-based companies. The money earned is paid into a UK bank account and remitted to Thailand...But you spend less than 180 days in Thailand...And less than 183 days in the UK...

What would your tax situation be?

RAZZ

Edited February 11, 2007 by RAZZELL

[smilingjim]

A hypothetical situation:

A UK national runs a business, with a WP in Thailand, working for UK-based companies. The money earned is paid into a UK bank account and remitted to Thailand...But you spend less than 180 days in Thailand...And less than 183 days in the UK...

What would your tax situation be?

RAZZ

Hypothetically complicated and in need of professional advice. Much more info needed.

[RAZZELL]

Hypothetically complicated and in need of professional advice. Much more info needed.

I know...that's why I posted

Basically, I could work remotely in Thailand (hence the need for a WP)...But all my clients, bank account into which I'm paid by money tansfers (BACS) and the occasional cheque, are in the UK.

If I spent over 183 abroad in a tax year (6th April to 5th April), for UK purposes I am classed as a non-UK tax-payer, but I understand I would need to pay some tax on UK income.

If for tax purposes I was classed as a Thai resident, I would be liable to income tax on the income which was remitted to Thailand, but I may apply for liability on each particular £ of income to be reduced by any uk income tax paid on that £. I would not receive a refund if the uk tax rate exceeds the thai tax rate.

If however, I spent less than 180 days in Thailand I wouldn't be classed as a resident for tax purposes...

Before anyone gets on their high-horse...What I'm trying to do is MINIMISE my tax liablities, not AVOID paying tax altogether

There is a UK tax helpline on: 0845 0700 040. But I dread phoning it

Many thanks.

RAZZ

Edited February 12, 2007 by RAZZELL

[GuestHouse]

I believe you are UK tax if any of the following are true.

If you undertake ANY or PART of your work in the UK.

If you spend more than 90 days in the UK within any one tax year (April5th~April4th)

If you have not completed one full tax years (April5th~April4th) living outside the UK (90 days of visits are allowed).

Since you have a work permit in Thailand you are also tax resident in Thailand.

So, if you are indeed tax resident in the UK, your tax liability is calculated as follows:

(Tax you would pay on your income if you live only in the UK) - (Tax you have paid in Thailand).

[GuestHouse]

If I spent over 183 abroad in a tax year (6th April to 5th April), for UK purposes I am classed as a non-UK tax-payer

The above is not actually true.

I put together and illustration of how your UK tax works, see attachment.

But be aware, if you are spending more than 90 days in the UK per year or youy are doing ANY work in the UK then you will be tax resident in the UK.

UK_Tax1.pdf

[smilingjim]

Hypothetically complicated and in need of professional advice. Much more info needed.

I know...that's why I posted

Basically, I could work remotely in Thailand (hence the need for a WP)...But all my clients, bank account into which I'm paid by money tansfers (BACS) and the occasional cheque, are in the UK.

If I spent over 183 abroad in a tax year (6th April to 5th April), for UK purposes I am classed as a non-UK tax-payer, but I understand I would need to pay some tax on UK income.

If for tax purposes I was classed as a Thai resident, I would be liable to income tax on the income which was remitted to Thailand, but I may apply for liability on each particular £ of income to be reduced by Fny uk income tax paid on that £. I would not receive a refund if the uk tax rate exceeds the thai tax rate.

If however, I spent less than 180 days in Thailand I wouldn't be classed as a resident for tax purposes...

Before anyone gets on their high-horse...What I'm trying to do is MINIMISE my tax liablities, not AVOID paying tax altogether

There is a UK tax helpline on: 0845 0700 040. But I dread phoning it

Many thanks.

RAZZ

A work permit is attached to a job in Thailand so wouldn't you need to set up a Thai Company to do it that way? I'm sure Sunbelt can advise on the the Thai side of it. There is also the question of who is going to invoice for the work done - the Thai Company?

From a UK point of view if you want to minimise tax you'd be better off ensuring that the money is not paid in the UK or remitted there. I don't know how much you are hypothetically talking about but it may be worthwhile setting up an off-shore company and off-shore bank account - Isle of Man or Jersey and issuing all invoices from there for your services both to UK clients and the Thai Company.

If it is structured in the hypothetical way mentioned you'll be taxed on all of it in the UK and, I think, in Thailand, although Double Tax Relief would be due. You don't want to go there!

There is an excellent leaflet by the tax office which summarises UK liability for those living/working abroad: IR20

You can download it from their website:

http://www.hmrc.gov.uk/home.htm

Type in IR20 in the search section - it's a PDF file. Section 5.20 provides the summary whilst the leaflet gives a full explanation.

http://www.hmrc.gov.uk/home.htm

PS: The people on the helpline are normally very helpful but will only advise you of your UK tax liability based on specific situations

[RAZZELL]

If I spent over 183 abroad in a tax year (6th April to 5th April), for UK purposes I am classed as a non-UK tax-payer

The above is not actually true.

I put together and illustration of how your UK tax works, see attachment.

But be aware, if you are spending more than 90 days in the UK per year or youy are doing ANY work in the UK then you will be tax resident in the UK.

Thanks GH..an interesting graphic...

Are you telling me that if you lived in Thailand all year, came to the UK and did one week's work, you will be tax resident in the UK?

Seems odd (unfair )

RAZZ

[RAZZELL]

Hypothetically complicated and in need of professional advice. Much more info needed.

I know...that's why I posted

Basically, I could work remotely in Thailand (hence the need for a WP)...But all my clients, bank account into which I'm paid by money tansfers (BACS) and the occasional cheque, are in the UK.

If I spent over 183 abroad in a tax year (6th April to 5th April), for UK purposes I am classed as a non-UK tax-payer, but I understand I would need to pay some tax on UK income.

If for tax purposes I was classed as a Thai resident, I would be liable to income tax on the income which was remitted to Thailand, but I may apply for liability on each particular £ of income to be reduced by Fny uk income tax paid on that £. I would not receive a refund if the uk tax rate exceeds the thai tax rate.

If however, I spent less than 180 days in Thailand I wouldn't be classed as a resident for tax purposes...

Before anyone gets on their high-horse...What I'm trying to do is MINIMISE my tax liablities, not AVOID paying tax altogether

There is a UK tax helpline on: 0845 0700 040. But I dread phoning it

Many thanks.

RAZZ

You don't want to go there!

Exactly

[kudroz]

The 180~ days rule only suggest where your worldwide income should be taxed. This is not what is in question here.

If the activities for which you are paid for are performed in Thailand; your income is Thai Source and is subject to taxation in Thailand regardless where the income is remitted to. (keyword: Thai Source Income)

You could be liable for taxes again on that same amount of money in the UK if your Tax residence or domicile is in the UK, but you could apply for a foreign tax credit on the taxes you've paid to Thailand, if you can provide evidence of such taxes paid to the Thai tax authorities.

The double tax treaty agreements you see everywhere only helps to determine the source of your income and how it is taxed. In your case it is very clear that your income is Thai Source since the activities for which you are paid for are performed in Thailand.

[RAZZELL]

The 180~ days rule only suggest where your worldwide income should be taxed. This is not what is in question here.

If the activities for which you are paid for are performed in Thailand; your income is Thai Source and is subject to taxation in Thailand regardless where the income is remitted to. (keyword: Thai Source Income)

You could be liable for taxes again on that same amount of money in the UK if your Tax residence or domicile is in the UK, but you could apply for a foreign tax credit on the taxes you've paid to Thailand, if you can provide evidence of such taxes paid to the Thai tax authorities.

The double tax treaty agreements you see everywhere only helps to determine the source of your income and how it is

taxed. In your case it is very clear that your income is Thai Source since the activities for which you are paid for are performed in Thailand.

I see your point...the work would be performed in Thailand and therefore taxed in Thailand...

So I would just have to make sure of my UK Tax residence or domicile status...

Thanks guys...It's getting clearer...(I think... )

RAZZ

[RAZZELL]

Tax postion for UK citizens who live/work abroad:

http://www.hmrc.gov.uk/pdfs/ir20.htm

RAZZ

[topfield]

A hypothetical situation:

A UK national runs a business, with a WP in Thailand, working for UK-based companies. The money earned is paid into a UK bank account and remitted to Thailand...But you spend less than 180 days in Thailand...And less than 183 days in the UK...

What would your tax situation be?

RAZZ

With regard to UK taxation only : non residency is not based on less than 183 days as you appear to think. It is a complicated subject but the general rule is 90 days per tax year is permitted with a average over 4 years not exceeding this ie not more than 360 days over 4 tax years and not more than 180 in any one tax year. Many other factors apply so this is only an advisory guideline.