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expat
22nd September 2004, 13:59
If I (who live in the EU but outside the UK) come and do a contract in the UK, then I will be liable for UK income tax on the income from that contract, but not NIC (if I have an E101 from my country of residence).

Question: how do we work out the sum on which the UK Income Tax is due? It shouldn't be the whole amount because that would take no account of NI or equivalent payments. Would it be the taxable income of a UK resident in the same contrat? Or the equivalent taxable income in my country of residence?

Bradley
23rd September 2004, 23:52
You wouldn't necessarily be due any UK income tax. You could be non-resident for UK tax for example.

If you go through a company then any income would be subject to corporation tax not IT.

tim123
24th September 2004, 08:54
How many times do I have to explain this? :-(.

It is not necessary to be Tax resident in a country to be liable to tax in that country.

Almost all developed countries have the rule that income earned whlst physically present (working) in the country is liable to local tax regardless of the person's tax residence.

You work in the country for one month you (are liable to) pay UK tax on one month's local earnings.

Work in the country for 6 months (183 days) and you are liable to pay UK tax on 6 months *world-wide* earnings.

Of course if you're only resident for one month it is very easy to skip off without paying (as no doubt some do) but it isn't legally correct.

Sorry expat, I don't have time to answer the rest of your questions. Perhaps tomorrow?

tim

expat
24th September 2004, 09:01
Tim123,


Sorry expat, I don't have time to answer the rest of your questionsactually you didn't answer any of my questions :)

I know perfectly well that tax is due on local income from day 1, and worldwide income from a later date when residency qualification happens. In fact I said that in my first sentence.

My question is on how much? Surely not on the gross income: a resident does not pay income tax on gross income, but on income net of Employers NIC. What is the equivalent sum for a non-resident?

McBainCo
24th September 2004, 10:55
My understanding was that you deduced a notional local NIC equivalent before subjecting the local gross income for local taxation.

Bradley
24th September 2004, 13:43
It is not necessary to be Tax resident in a country to be liable to tax in that country.

Almost all developed countries have the rule that income earned whlst physically present (working) in the country is liable to local tax regardless of the person's tax residence.

You work in the country for one month you (are liable to) pay UK tax on one month's local earnings.
Tim - what you say about liability is correct for employees of their own companies; however, if you can convince the UK Revenue that you are subject to tax overseas and that tax equates to any UK charge then you ask if everything you get can be paid tax-free.

The same argument runs true if you are self-employed in the UK and non-resident


Work in the country for 6 months (183 days) and you are liable to pay UK tax on 6 months *world-wide* earnings.
If you're UK resident, you're UK resident for the full UK tax year. You would be assessed on a UK tax year basis on UK source income or investment income/capital gains remitted to the UK during that tax year. Look at www.inlandrevenue.gov.uk/..._notes.pdf (http://www.inlandrevenue.gov.uk/pdfs/2003_04/non_res_etc/sa109_notes.pdf)
to see what income is taxed if you become resident.

expat
24th September 2004, 13:47
McBainCo,

congratulations on having read the question. Thanks.