Tax Rebates & Refunds

Tax advice for foreign nationals working in the UK

December 18, 2012
Posted in Income Tax — Written by Chris

The UK tax system, although not much different to other systems around the world, can be a tricky and complicated one to understand. Things become even more complicated when you are a foreign national who starts working in the UK.

If this is the situation you are currently in, then you will need to determine how you should be paying tax on the income you earn abroad. Here are a few of the basic details you need to know.

Residence and domicile

The term ‘residence’ refers to people who live most of the time in the UK but are ‘domiciled abroad’. You are ‘domiciled abroad’ if:

• Your permanent home is in another country
• You and your parents were born in another country
• You intend to return to your permanent home at some point

Paying tax

If you are ‘resident in the UK for tax purposes’ but are ‘domiciled abroad’, you have a choice about the tax you pay on your foreign income. You can choose one or the other of these options:

1. Pay tax in the UK on both foreign and UK income – this is called paying tax on the ‘arising basis’
2. Pay tax in the UK on UK income and foreign income that you bring to the UK – this is known as paying tax on a ‘remittance basis’.

The HMRC, or a tax specialist, is the place to turn for detailed advice or if you have very complicated circumstances.

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