Qatar/UK Double Taxation Agreement
I hear a lot of talk about how British ex-pats need to stay out of the UK for 1 whole tax year and are only allowed to be in the UK for 90 days, otherwise they are liable to pay tax on income earnt in Qatar on a remittance basis.
However, I have also heard the opinion that you can come and go as you like, stay UK resident & domiciled and simply declare all your Qatar income during self-assessment because as there is a double taxation agreement between Qatar and the UK, you will only pay 0% Qatari income tax and will not be taxed on it again by HMRC.
Which one is correct? Has anyone actually declared their foreign income in their self-assessment tax return... what was the result?
Please ntoe that HMRC intriduced new guidelines for determining non-resident status for tax purposes in May 2013. The document is expected to be law shortly but HMRC are using these guidelines now.
Basically if you can answer yes to any of the questions on Page 8 of the notes you are not eligible to pay tax and you can ignore the remainder of the booklet. Most expats will fall under the Third question at para 1.5.
The Guidance Notes can be found at the following link
http://www.hmrc.gov.uk/international/rdr3.pdf
I hope that this helps.
Please ntoe that HMRC intriduced new guidelines for determining non-resident status for tax purposes in May 2013. The document is expected to be law shortly but HMRC are using these guidelines now.
Basically if you can answer yes to any of the questions on Page 8 of the notes you are not eligible to pay tax and you can ignore the remainder of the booklet. Most expats will fall under the Third question at para 1.5.
The Guidance Notes can be found at the following link
http://www.hmrc.gov.uk/international/rdr3.pdf
I hope that this helps.
Hi guys, I hope to be moving to Qatar this September to take up a teaching position. Like yourselves, was very confused whather I would have to pay UK tax. After doing much research (and as wasaloadie and ozzie have mentioned):
1) If you leave the UK and return within 183 days (within a given tax year), you will have to pay tax on earnings abroad.
2) If you leave the UK and stay for more than 183 days (and don't return to the UK for more than 91 days within that tax year) then you pay no tax in the UK.
BUT
To avoid paying tax (2) you have to ensure that you let the dreaded tax man at HMRC know. You will have to complete a P85 to let them know you're going!
I hope this is useful :S
Declare that you are not domiciled in the Uk (form P85 I think) and you shall not be liable for tax on earnings in Qatar. If in doubt phone the Tax office, they were very helpful in the advice they gave me. They are not ogres, but proud to give you the correct advice on tax matters. I came off the phone with them, feeling satisfied. I have sent in all the tax details for earnings before my departure and got a very nice letter confirming that I will not be eligible to pay tax on my Qatar earnings and that I may also be eligible for a tax refund on my UK earnings (to be calculated)
Thanks for all the really helpful advice especially Ozze. This has really cleared up my confusion and helped prevent any silly blunders :-)
Hi woodhouse
The simple way is to declare non residency when you move out of UK
A person who is non-UK resident: is taxed on (some) UK source income only. Such a person can bring non-UK income into the UK freely.
A person who is non-UK resident: is not subject to capital gains tax at all (even on disposals of UK assets). Such a person can bring non-UK gains into the UK freely
Simple explanation for residency and domicile status here, I just came across it, no affiliation with them
Your domicile and residency are two different things, you cannot change your domicile unless you break all ties with UK and gain domicile somewhere else. Normally the domicile is linked to where your father is born.
http://www.charlesrussell.co.uk/UserFiles/file/pdf/Private%20Client/Residence_and_Domicile.pdf
Secondly double tax treaty doesn’t mean that Qatar tax is 0% hence you do not pay any tax on income declare in self assessment- QDCL is quite right
Simply it means that you will not be taxed twice on your income. for example you will calculate tax on your foreign income using UK tax rates and deduct any tax (if there is any) you have already paid in other country, having double tax treaty and pay the rest to HMRC.
For example your foreign income is 100,000 pounds (earned in Qatar) for year 2012-2013 and you are classed as UK resident, you will pay tax & NI using HMRC tax rate of 20% & 40% , as you haven’t paid any tax in Qatar (0% income tax rate) there isn’t anything to deduct. Tax & NI works out to be around 35,000 (pounds)
Double tax treaty is mainly applied to UK companies having a branch here, who pay corporation tax at 10% here in Qatar and when they submit their tax return back in UK, they deduct this tax paid at10% from any tax liability due to HMRC
JJJZ: one can become non-resident any time in the year by filling in Form P85 (available from HMRC) - yes you are right if you leave the UK before 6th April and stay out for until 5th April the following year, and you are automatically classed as nonresident if your visit doesn’t exceed the allowed number of days, but it is always better to fill in P85 in both cases just to make life simple.
In Summary declare Non residency in UK when one moves out to benefit the tax free income, don’t mess with HMRC, they will catch you one way or the other
Keep it straight & simple
My understanding is that if you come before the beginning of the UK tax year (some point in early april), you will pay tax on all income earned in tax year 12-13 but as it will only be a month or so's worth it is not significant. If you come after beginning of the tax year, you will pay full UK tax on all monies earned here in tax year 2013. You still have to pay NI contributions for 1 year after you arrive and then you can opt out but beware, this will affect your UK pension at a later date.
But as with all these things, better to take some advice.
If you go to this link on the HMRC website it tells you all you need to know :
http://www.hmrc.gov.uk/cnr/hmrc6.pdf
Double taxation agreements are only in place to make sure you do not pay tax twice on the same income. However since Qatar income tax is zero if you do not meet the UK non resident criteria you can still be taxed on your income in the UK.
Try and be clever with the tax man anywhere in the world and you will lose.
NB: it is better to have some information from any British people who can convey you the accurate and updated information.
Also remember that your travels might not co-incide neatly with the financial year, so there might be two year's worth of tax considerations.
Your home country might allow you to declare yourself "not a resident for tax purposes" on your tax return for that year, so that any income earned overseas during that financial year is not taxed. BUT if you do that, you may well incur tax implications such as: you might have to pay the highest tax level on any income earned in your home country; or there might be tax implications on selling property or shares.
If the country where you earn income has a double tax agreement (or similar) with your home country, you might be able to just submit your tax return in the UK as normal, listing only any income earned in your home country (eg interest in bank account, any rent income from a house etc). The agreement basically says that the two countries accept that the other country can tax their citizen on earnings there (abroad), and the home country will not apply further taxes on that money when it is brought back (to the home country).
The money you receive cash in hand in Qatar is technically not taxed therefore "tax free", BUT people DO do have to look at the tax implications in their home country, especially if they are here for less than a full financial year.