Double Taxation Treaty

[wurzel]

This is a question my accountant should answer but because he was so useless I've had to dispense of his services.

I was working in Spain for most of the last financial year and was planning on being non resident in the UK and paying my taxes over there. I would have been taxed at a flat rate of 20% + 4 % NI (or whatever their equivaluent is) - but no expenses are allowable.
On this basis, it would have made financial sense to pay tax in Spain rather than in the UK even if I had deductable expenses in the uk system.

Unfortunately, my contract got cut short and I'm technically resident in the UK again (even though working in the Channel Islands, I've spent more than the allowed 90 days in the UK this year) so I'll be liable to tax for the whole year.

So far I haven't paid tax anywhere this year yet but am thinking about going back to Spain and paying up my 24% on what I earned between April and September. Then I'll have to top this up with a payment to HMRC; how much, I don't know but what I'm thinking is that I can offset ALL my expenses that weren't deductable in Spain against this payment as they are deductable under the UK system thus reducing my burden. Does this sound plausible?

By the way, I need a new accountant who can do a payroll for me every month & do my company accounts + personal tax return all in for a reasonable price.

[BlasterBates]

For employment income there's no top up tax to pay, you need something from the spanish tax authorities or a the equivalent of a P45 to prove your income was through employment. You pay top up tax on dividends, and interest, unless spanish tax rates are higher. Any profits of activities of a business i.e. if you register your Ltd in Spain would also not be subject to a top-up tax.

[tim123]

For employment income there's no top up tax to pay, .

I don't agree.

You declare the amout earned to HMRC, work out the UK tax due, then deduct the spanish tax paid and pay the rest to HMRC.

Look at the SA form for foreign earned income and you will see that this is how it works.

To answer the OP, I believe that you can deduct all your foreign expenses from the gross salary before calculating tha tax due. This is what I did and no-one complained.

tim

[wurzel]

To answer the OP, I believe that you can deduct all your foreign expenses from the gross salary before calculating tha tax due. This is what I did and no-one complained.

tim

That's what I wanted to hear. Thanks.