Salary paid in the UK whilst working abroad for ~3 to 5 years?

[Fred Bloggs]

In the next few days I expect to be made an offer to do 6 months work in the UK followed by 3 to 5 years work in Australia. It's been explained to me by the company today that the company willemploy me in London, will pay me a salary in the UK then sends me to Australia on an expatriate assignment. The family will go with me and we'd expect to return to the UK once a year to visit family here. Once I leave the UK no further work will be done here but my salary will be paid in the UK which I now expect I will not touch. While I'm in Australia the company pays all my living expenses, visa, tansport, medical etc... a daily per diem, pays all the Australian tax that is due and pays 9% into a superannuation scheme. Seems a good deal. I looked at HMRC P85 form that has sections for UK income paid through a UK pay roll whilst abroad but I can't work out what tax arises as I will be out of the UK long term and won't come near the 90 day average over five years rule to pay UK tax. The company insists that I won't pay any Australian tax myself but I can't see how that cen be true as Australia and the UK tax you on worldwide income as far as I can see in the dual taxation agreement. Reading HMRC 6, I think I would be most likely not UK resident but would be UK ordinarily resident for UK tax purposes. Anyone know how this works?

[prozak]

Considering the ATO tried to tax some sports people (think it was tennis players) on the income they earned while they were in Aus I can't see how they wont want tax from you.

Is the company paying all australian income tax that is due?

Sounds like a great offer but you definitely need to look at strucuturing it correctly.

[BlasterBates]

There are special agreements for expats in foreign countries to work for a limited period and continue to be taxed in their own countries. I would imagine that if there is such an agreement that allows you to work for a UK company in Aus, that if you didn't pay tax in the UK they would expect tax in Aus. It's unlikely that you could work tax free though.

Probably better to be taxed in Australia and have done with it. Certainly you want to check up whether this is really allowed anyway.

[Fred Bloggs]

Thanks, it seems legit. The company has a tax specialist who does your Oz and UK tax returns for you each year and the deal is that you do not pay any more tax than if you stayed in the UK. The only downside tax wise is going from being a contractor paying about 15 to 20% tax, splitting income with Mrs Bloggs etc... to being an employee with a UK marginal rate of 42%. The Oz deal is ~AUD 5k per month to cover your living out there of which I think AUD 3k would be rent for a place to live, they pay the tax on that for you. From what I can see being ordinarily resident, still on UK payroll and paying full UK tax, then under the dual tax treaty, I will not be taxed on the same money again there. The moneys paid in Oz will be taxed there but the company pays that. One last thing I'm not sure of is if I need to keep paying UK NIC's or not, I guess the answer is yes.