Tax on Earnings Overseas

[BlasterBates]

i think it does matter still..if you are working in a country with lower level of taxes than the uk, then you end up with the difference here. in the case of dubai, it is the difference between uk tax and 0.

when taking a contract abroad, it is important to ensure you consider the overall tax and not the tax in that country. that's where many newbies get caught.

Usually only on dividends and interest, most income isn't, that is the principle function of the DTA.

The top-up tax rule applies generally to any country with which there is no DTA.

[AnthonyQuinn]

I am afraid so. IMHO if you are resident in a country, it is reasonable to have to pay tax there. Pretty much all countries work on this principle. Most also give you credit for tax legitimately paid elsewhere, which IMHO is only fair. But there is no real reason why a country that you are liable for tax in should let you off with tax that you are liable for but have not actually paid elsewhere.

If you want WA taxes only, up sticks and move there 100%. Sorry, I'm not trying to be nasty but it seems obvious to me.

Will do so as soon as wife finds a job there. Then Hector will lose her taxes too.

I feel this law bizarre. I pay tax where I live. Wife pays tax where she lives. Whats wrong with that? Both of us visit each other when we can. When your country cant provide you work forcing you to leave away from family, and then asks for tax on money earned elsewhere, I frankly cannot see the justice here.

Sadly, only way to hit these people where it hurts is to move out at the first opportunity.

[expat]

Will do so as soon as wife finds a job there. Then Hector will lose her taxes too.

I feel this law bizarre. I pay tax where I live. Wife pays tax where she lives. Whats wrong with that? Both of us visit each other when we can. When your country cant provide you work forcing you to leave away from family, and then asks for tax on money earned elsewhere, I frankly cannot see the justice here.

Sadly, only way to hit these people where it hurts is to move out at the first opportunity.

That's very socialist. Your country is not there primarily to provide you with work that you want to do. It's a bit petulant, and very unpatriotic, to say that the country therefore deserves all that it gets, and that one of your ambitions is to "hit these people where it hurts".

You seem to take the view that you plain and simply do not live in the UK at all to any degree, but IMHO that is not so, you do. If you work abroad, sleep there when you must, and come home to your home and family when you can, I call that living in the UK. It's what I and many others do. Not the life you'd like perhaps, but that's not HMRC's problem.

Of course if you up sticks and actually do not live in the UK any more, then you will not be liable for UK tax (unlike your adopted USA, which does not do it so fairly). But it might be better to do it because that's what you want to do, not out of spite at being taxed in your own country.

[BlasterBates]

Will do so as soon as wife finds a job there. Then Hector will lose her taxes too.

I feel this law bizarre. I pay tax where I live. Wife pays tax where she lives. Whats wrong with that? Both of us visit each other when we can. When your country cant provide you work forcing you to leave away from family, and then asks for tax on money earned elsewhere, I frankly cannot see the justice here.

Sadly, only way to hit these people where it hurts is to move out at the first opportunity.

As I mentioned in my previous post according to the DTA you don't pay a penny of UK income tax if you have an employment contract in the US. Most people think you pay some top-up. No no no this isn't true.

I would see a good accountant just to verify that.

The whole purpose of the DTA is to allow people to have dual tax residency without this unfair treatment.

In the past I have done some work in the UK and it wasn't taxed in Germany, no topup tax nothing....nada, this under the DTA which is identical in wording for both countries (that's thpoint of it), and when I read the US-UK agreement it has the exact same wording.

[lxt04]

When your country cant provide you work forcing you to leave away from family, and then asks for tax on money earned elsewhere, I frankly cannot see the justice here.

In the UK, there's a residency test. It used to be simple enough, and now it's a little more complicated - but it is possible to become a non-resident and pay no UK income tax on your overseas earnings (as a certain Tory peer does).

This residency test is there for a reason. It is to prevent, say, a high earner in a family working abroad, and transferring his/her tax-free earnings back to family in the UK - a family that, presumably, makes use of services provided by the state (education, healthcare, etc) without paying their fair share of tax.

Although, as I mentioned before - don't think it's any better in the US. If you /your wife decided, say, to emigrate to the US and become citizens (after many years) you would pay US income tax on all worldwide earnings, regardless of residency. That's the worst tax residency rules of any country in the world.

As long as you're a US citizen, you will pay US income tax on your worldwide earnings above a certain level. Your residency status is irrelevant. When I was working in the Middle East, my employer had to set up an entirely separate pension/savings plan scheme for american staff so as to minimize their tax hit.

So before you complain about how unfair the UK is, think about the fact that most of the countries you'd want to move to have very similar rules, and some - the US included - have even stricter ones.

[expat]

...
Although, as I mentioned before - don't think it's any better in the US. If you /your wife decided, say, to emigrate to the US and become citizens (after many years) you would pay US income tax on all worldwide earnings, regardless of residency. That's the worst tax residency rules of any country in the world.

As long as you're a US citizen, you will pay US income tax on your worldwide earnings above a certain level. Your residency status is irrelevant. When I was working in the Middle East, my employer had to set up an entirely separate pension/savings plan scheme for american staff so as to minimize their tax hit.

So before you complain about how unfair the UK is, think about the fact that most of the countries you'd want to move to have very similar rules, and some - the US included - have even stricter ones.

You don't even need to be a US citizen. If you are an alien resident in the US, and have over a certain net worth, then you remain liable for US tax on all worldwide income even after you stop being US-resident and become resident elsewhere, because just like a US citizen doing the same, you are presumed to be leaving as a tax evasion plan.

[BlasterBates]

you don't even need to set foot in the USA, as soon as you receive a green card you are liable.....for the rest of your life.

[AnthonyQuinn]

you don't even need to set foot in the USA, as soon as you receive a green card you are liable.....for the rest of your life.

Thanks for this. this is all very enlightening. Well, good to see that we arent the only ones suffering under these draconian laws.

I am a simple guy. Like to pay tax for the roads, police, armed forces and hospitals where I live. Not where my family does. They pay their fair tax there for the same services. But i suppose this simple approach is not shared by everyone else.

Someone mentioned that if I send back money to my family who are enjoying UK benefits, I should pay tax. My family will still enjoy those benefits even if I dont send money back.

Will ask accountant about the top-up which is great advice. Need to convert all earnings to salary in that case to avoid the top up tax if that is found to be the law.