Becoming A Tax Exile Or The 180 Day Rule.

[sanmiguellight]

I am in a position where i am about to leave the UK to work in the oil industry and have no real reason to come back to the UK for the next few years at least.

Ive been out the UK all this tax year though i'm back now for 1 week.

So can anyone confirm exactly what is involved in becoming a tax exile or to avoid paying income tax as i dont wish to be funding the UK when i am not living there.

[jackdanielsesq]

Normally six months out of twelve will do it.

BR>Jack

[sanmiguellight]

I must add, ive formed a UK ltd company to invoice the Norwegian company i'm working for, and i will be employing myself and paying myself this way ... basically i am looking to do anything i can to avoid paying tax .. its my one man protest!

Edited July 2, 2009 by sanmiguellight

[isanb]

I think :

if there is no money transferred in the UK there is no tax and the fact that you live in the UK or not change nothing.

That's why lot of rich european people come to live in the UK, they just transfert a minimal sum of money to live (they pay tax on this) and the rest of the money go in foreign country (no tax).

for example :

It is also the case for football players whose major part of their wages are paid on foreign accounts (no tax).

[sanmiguellight]

That could be the problem as despite not being in the UK ive set up a UK ltd company to invoice who im working for, thus the UK company ive formed will be my employer.

Maybe i need to form a company in a tax haven.

Any oil workers on here please let me know of a decent accountant/ tax adviser.

[endure]

I am in a position where i am about to leave the UK to work in the oil industry and have no real reason to come back to the UK for the next few years at least.

Ive been out the UK all this tax year though i'm back now for 1 week.

So can anyone confirm exactly what is involved in becoming a tax exile or to avoid paying income tax as i dont wish to be funding the UK when i am not living there.

The best thing to do is ask HMRC here: http://www.hmrc.gov.uk/cnr/faqs_general.htm

You need to become non-resident for tax purposes. I'm not sure if forming a UK company is a sensible thing to do as the company is then subject to taxation too.

[endure]

Normally six months out of twelve will do it.

BR>Jack

UK taxation is slightly more complicated than that.

[sanmiguellight]

Normally six months out of twelve will do it.

BR>Jack

UK taxation is slightly more complicated than that.

Isnt that the truth!

[isanb]

Essentially, an expatriate's tax status will fall into one of five categories:-

1) Resident: Based upon the amount of time spent in the UK on an annual basis. If an individual spends 183 or more days in the UK in any one tax year he or she will be classified as resident and will pay UK tax as a normal resident.

2) Ordinarily Resident: This is a longer-term concept where the Inland Revenue will take a view over three to four years on where an expatriate habitually resides. If an expatriate is habitually resident in the UK for 90 or more days in any one tax year then the category is ordinarily resident and such status impacts upon tax liabilities accordingly.

3) Not ordinarily resident: This category applies to an expatriate who works overseas and whose intention is to work and reside overseas and who will not be spending 90 or more days back in the UK. If the intention to remain overseas can be proved before leaving then the expatriate earns this status from the day of leaving the UK along with the accompanying tax breaks.

4) Not resident: A definite and sought after status applied to an expatriate who conforms to the rules of working and living overseas and not returning to the UK for any period of time which could throw doubt on that intention, Not resident means not liable to pay tax on income or capital gains, provided these are as offshore as the expatriate.

5) Domicile: Any UK citizen, wherever based, remains UK domiciled unless permanently emigrating through official channels. Essentially, your domicile is linked to the country where your roots are and this status clings to you for life, catching up on your death when inheritance tax is due.

Although it may appear that there is little difference between some of the categories, do not be fooled. For instance one of the main differences between ordinarily resident and not ordinarily resident is that under the former category an expatriate is still within the capital gains framework, but under the latter category there is no liability for capital gains Tax.

The Inland Revenue and Your Tax Status

Expatriates must clarify their tax status with the Inland Revenue. On departure, or as soon as can be arranged if already overseas, a form P85 must be completed, this covers all the technicalities of date of departure, intention of remaining overseas and assets (such as property) left behind in the UK.

The answers provided will be what determines your new tax status. If you are uncertain as to the length of time you will be posted overseas, it is advisable to submit the form with an accompanying letter, or copy of your contract from your employer which confirms or indicates the employment period will be for a time long enough (and always for at least one full tax year) to warrant being classified as either not ordinarily resident or not resident.

There are several incentives for such tedious form filling:-

• First, having confirmation from the Inland Revenue of your new tax status tidies up your file and records this period of time in a way which will not catch up with you late one.
  Secondly, such confirmation can be useful when dealing with the tax authorities in your new country of residence. And finally, the really good news, very often new expatriates are eligible for a tax rebate on tax already paid in the tax year of departure.
  

Once the P85 is filled in and posted off be sure to make a diary note to check that the Revenue has actually written back with a confirmed reply of status. All too often the are just filed by the Revenue and the expatriate is left bereft of the vital confirmation of status.

Your Tax status is the foundation of all your tax liability, it is like building a house, if you don't have the foundations your house will fall down and it is exactly the same if you don't know your tax status or if that status is confused - you cannot plan properly.

[endure]

If you're going off to earn untold riches with the Norwegians wouldn't it be worth your while talking to an accountant who specialises in this sort of stuff before you go? He'll know much more about it than we do

[Maizefarmer]

Normally six months out of twelve will do it.

BR>Jack

UK taxation is slightly more complicated than that.

My understanding is that its 90days - that is 90 days each year to be classed as a non-res for tax purposes - but these things are never as straightforward as that. Just take NHS entitlements - ho wmuch time must you be out of the UK before you loose entitlement to free care on the NHS?

I have seen articles on the web that say 3months, some say 6months, others say 1year and my own undertsanding was that it is/was 3years before one lost NHS entitlement to free care.

BUT it's slightly more complicated than that - points like, where have you been residing, and is that other country an EU or Non-EU country? Were you residing out side of the UK because you were working, or are you retired? Were you on an extended holiday? - and its on these fine points that different articles give differents timeframes before NHS benefits are no longer free.

..... just as jackdanielsesq says, "UK taxiation is slightly more complicated than that....." - there will be all sorts of fine print attached to different time periods given e.g. where were you(?), what were you doing(?) - were you working(?), does the country you were wroking in have a reciporiocal tax agreement with the UK(?) blah blah, blah blah..... its points like these that ultimately determine what you have to pay (if anything), and how much (as in the case of working in coutnries with reciprocal tax agrements.

i think to get an accurate answer, these issues need to be put into context.

[tmd5855]

I am ex Merchant Navy now living in Thailand and working offshore in the oil industry. Do not listen to the 6 months out of the UK that does not apply now to offshore. (No more than 182 days in the UK>)

It was changed back in 1997 when the F.E.D. (Foreign Earnings Deduction) was removed from "Persons/vessels engaged in mineral extraction of the seabed" This method of claiming tax back was originally meant for the UK Merchant Navy personnel.

Anyone now who wants to avoid tax has to do the 90 day rule. For two years I satisfied HMRC with my days out of the UK. For my 3rd year recieved a NT coding. Which means "Not resident for the purposes of tax".

If you only go back the UK for 60 days each over two years you can roll that over and stay more than 90 the next. But, I would not do that since the HMRC are looking at closing that loophole.

You will get a lot of advise most of itr can be <deleted>. Tax avoidance is legal. Tax evasion is illegal.

Been living Thailand tax free for 6+ years and have no hassle from the HMRC anymore since I am still on the Radar but legit.

Phone the HMRC tell them (Honestly) what you want to do ....... they will tell you if its okay.

If you work outside the UK, do not return to the UK for more than 90 days in a year or 365 day period and you can prove that with airline stub, credit card receipts, passport entry/departing stamps you will be okay.

PM me if you want some more advise or accountants/tax firms names/phone numbers.

[sanmiguellight]

If you're going off to earn untold riches with the Norwegians wouldn't it be worth your while talking to an accountant who specialises in this sort of stuff before you go? He'll know much more about it than we do

Already spoken to 2, theyve given conflicting info, not sure either really knows what he's talking about.

[Maizefarmer]

I am ex Merchant Navy now living in Thailand and working offshore in the oil industry. Do not listen to the 6 months out of the UK that does not apply now to offshore. (No more than 182 days in the UK>)

It was changed back in 1997 when the F.E.D. (Foreign Earnings Deduction) was removed from "Persons/vessels engaged in mineral extraction of the seabed" This method of claiming tax back was originally meant for the UK Merchant Navy personnel.

Anyone now who wants to avoid tax has to do the 90 day rule. For two years I satisfied HMRC with my days out of the UK. For my 3rd year recieved a NT coding. Which means "Not resident for the purposes of tax".

If you only go back the UK for 60 days each over two years you can roll that over and stay more than 90 the next. But, I would not do that since the HMRC are looking at closing that loophole.

You will get a lot of advise most of itr can be <deleted>. Tax avoidance is legal. Tax evasion is illegal.

Been living Thailand tax free for 6+ years and have no hassle from the HMRC anymore since I am still on the Radar but legit.

Phone the HMRC tell them (Honestly) what you want to do ....... they will tell you if its okay.

If you work outside the UK, do not return to the UK for more than 90 days in a year or 365 day period and you can prove that with airline stub, credit card receipts, passport entry/departing stamps you will be okay.

PM me if you want some more advise or accountants/tax firms names/phone numbers.

Thankyou ... exactly what I wanted to say (and said - with conditions attached - for fear of attraction attention from "Correction Department" members) - it is just what my accountant has been telling me for the last half dozen years plus, and, notwithstanding some or other specific set of circumstances, is pretty much the rule appling to UK ex-pats who wish to avoid Her Majesties Bean Counters.

[endure]

Normally six months out of twelve will do it.

BR>Jack

UK taxation is slightly more complicated than that.

My understanding is that its 90days - that is 90 days each year to be classed as a non-res for tax purposes - but these things are never as straightforward as that. Just take NHS entitlements - ho wmuch time must you be out of the UK before you loose entitlement to free care on the NHS?

I have seen articles on the web that say 3months, some say 6months, others say 1year and my own undertsanding was that it is/was 3years before one lost NHS entitlement to free care.

BUT it's slightly more complicated than that - points like, where have you been residing, and is that other country an EU or Non-EU country? Were you residing out side of the UK because you were working, or are you retired? Were you on an extended holiday? - and its on these fine points that different articles give differents timeframes before NHS benefits are no longer free.

..... just as jackdanielsesq says, "UK taxiation is slightly more complicated than that....."

Er, no jackdanielsesq didn't say that - I did.

[Soutpeel]

So can anyone confirm exactly what is involved in becoming a tax exile or to avoid paying income tax as i dont wish to be funding the UK when i am not living there.

TMD5855 has got it right...Jack Daniels Esq doesnt know what he is talking about

Out of interest where are you heading ??

[Dave the Dude]

Phone the HMRC tell them (Honestly) what you want to do ....... they will tell you if its okay.

I would go along with the above statement through personal experience.

I found the people answering telephone queries to be VERY helpful. The girlie who I talked-to even

questioned why I am paying tax for private health cover, which had actually stopped when I retired 3 years ago.

Dave (finally on the right tax code )

[sanmiguellight]

Ive spoken to the Inland Revenue today regarding becoming a tax exile, and the ruling is you must be in the UK for 90 days per year for the first 5 years, should you go over this on year 5 you'd have to pay back all the taxes from previous years.

They count these days from how many midnights you are in the country, but if you come home for medical, educational or serious family issues such as marriage/birth/death these days dont count, the way i took it was dont bother coming back unless it is for one of the above reasons.

It is possible to form a UK ltd. company and employ yourself and to do it this way, but i now have to speak to a different department to get info on owning a limited company whilst being a tax exile, and what tax the company would have to pay.

[WeeGB]

Hi sanmiguellight, firstly good luck in your efforts to avoid paying UK tax, as a future tax exile hopeful, I'm watching with interest.

Secondly can you clarify the first paragraph of your last post?

"Ive spoken to the Inland Revenue today regarding becoming a tax exile, and the ruling is you must be in the UK for 90 days per year for the first 5 years, should you go over this on year 5 you'd have to pay back all the taxes from previous years."

It reads to me that one MUST be in the UK for 90 days. I always understood that you must be in the UK for LESS than 90 days.

Cheers

WeeGB

[sanmiguellight]

Sorry writing this late my minds half asleep.

It should read ..... The maximum amount of time you are allowed in the UK is 90 days per year for the first 5 years, but i think if you planning on becoming a tax exile, the best thing is not to come back at all unless its for something important ... I think a 2/3 week holiday once a year would be ok, and wouldnt raise suspicion ....

Once youve done the 5 years out the country then i think youre laughing and there wont be any more checking up.