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Am I a UK tax resident or non-resident?

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  1. #1

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    Nov 2018
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    Am I a UK tax resident or non-resident?

    Hi all - Here is my situation:

    1)I am currently co-founder of a UK Ltd start up company which is making no profit (although we have sales our expenses are more than our sales) and myself and the other co-founder are not paying ourselves any salaries or dividends and expect this to continue for the next year or two.
    2)I will be moving to HK next month and will be investigating sales opportunities in Asia so there may be some income there.
    3)I also have a couple of rental flats in the UK

    We obviously file a UK companies tax return and I currently file a personal self-assessment in the UK for my rental income which I would expect to continue to do. Is there anything that I need to do in Hong Kong - I am assuming not as income would be taken in to the UK Ltd company but I just want to be sure. Anything else I have forgotten?

    Much appreciated.


  2. #2

    Join Date
    Jul 2011
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    1,270
    Quote Originally Posted by mryatt
    Hi all - Here is my situation:

    1)I am currently co-founder of a UK Ltd start up company which is making no profit (although we have sales our expenses are more than our sales) and myself and the other co-founder are not paying ourselves any salaries or dividends and expect this to continue for the next year or two.
    2)I will be moving to HK next month and will be investigating sales opportunities in Asia so there may be some income there.
    3)I also have a couple of rental flats in the UK

    We obviously file a UK companies tax return and I currently file a personal self-assessment in the UK for my rental income which I would expect to continue to do. Is there anything that I need to do in Hong Kong - I am assuming not as income would be taken in to the UK Ltd company but I just want to be sure. Anything else I have forgotten?

    Much appreciated.
    Assuming you are moving to HK full time, then you will likely not be tax resident in the UK, but see here for a simple flow chart to check:
    https://home.kpmg/content/dam/kpmg/p...-flowchart.pdf

    See RDR3 for the detail and for issues related to splitting the tax year into resident and non-resident treatment:
    https://www.gov.uk/government/public...dence-test-srt

    The main issue is how "tied" you are to the UK (homes, family, time spent in the UK, work contract overseas, etc).

    Note that even if you are not UK tax resident, assuming you are a British citizen, you will still need to pay tax on any income arising in the UK. You say you will still be filling in a tax return for your rental income so declare it there. You will get the usual tax free allowances so use as much of that as you can.

    For tax return filing, note that the relevant extra pages in the return required for non-residents cannot be done online through the HMRC website the last time I checked, you need to buy third party software (or a paper form if that's still an option) or use a UK accountant to file for you.
    Morrison, TheBrit, shri and 1 others like this.

  3. #3

    Join Date
    Nov 2018
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    This is massively helpful, thanks so much. I would prob be present in the uk for more than 16 days but less than 91 (holidays etc) but i guess the one i am
    not sure about is substantive uk employment...

    given i will still be working for a uk registered company is this irrelevant unless i am physically working in uk for more than 40 days a year? ??


  4. #4

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    Jul 2011
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    You'll have to go though the details of RDR3. I know people who live overseas and are paid by their UK company and I think they are ok. The thing to avoid is working for that UK company while you are actually in the UK.

    On the tax return they ask (or did until I finally got off them) the number of *hours* worked in the UK and abroad. Basically what they are doing is saying if you leave the UK for all but very few days, OK no tax. If you leave the UK for a real job for a lot of the year (maybe a summer holiday in the UK, but not too long or that's not an employed holiday), OK no tax. If you are bouncing round the world while really operating your life out of the UK, then that doesn't count and we want our pound of flesh. The outbound test is designed to be more sticky so you have to leave more definitely in order to start appearing non-resident, if that makes sense.

    For those that are interested, the Gaines-Cooper case triggered this. He stuck to the old, unofficial line of less than 90 days a year in the UK to be tax exempt while still keeping his wife, child, child's school, house, Ascot membership and other stuff going in the UK. HMRC clobbered him for decades of back tax when they decided he hadn't really left and eventually won through the various courts. HMRC want to be sure you really are non-resident, not using as a tax dodge.

    RDR3 now is at least fairly clear (if weighty going). If in doubt, consult a good tax advisor. I was lucky and was able to be employed by my HK business partner so getting me a HK employment visa and a HK work contract to use for HMRC. Doing it for yourself, maybe more tricky.


  5. #5

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    Nov 2018
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    All makes sense and I would see why they would want their tax if people are just using it as a dodge. We did consult Deloitte some months ago and they said that I am all fine as non-resident but I cant remember if I told them that my company is UK registered hence the question. I will be "working" in the UK for <5 days a year and given its my own company and I am not being paid anyway it seems kind of irrelevant. All other factors make me non-resident - husband also moving for HK based bank, letting our UK house etc etc. So I think I am good. I will have a little bedtime read of the attached though as I like to be totally sure on anything tax related - thanks for the docs and the advice.


  6. #6

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    Jul 2011
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    Quote Originally Posted by mryatt
    All makes sense and I would see why they would want their tax if people are just using it as a dodge. We did consult Deloitte some months ago and they said that I am all fine as non-resident but I cant remember if I told them that my company is UK registered hence the question. I will be "working" in the UK for <5 days a year and given its my own company and I am not being paid anyway it seems kind of irrelevant. All other factors make me non-resident - husband also moving for HK based bank, letting our UK house etc etc. So I think I am good. I will have a little bedtime read of the attached though as I like to be totally sure on anything tax related - thanks for the docs and the advice.
    Yep, that's all good. I was a director of a UK company (unpaid) and did rent our house when we first left so similar, but timed to leave the UK just before the end of the tax year. I split the rental income between myself and my wife to stay within the tax allowance threshold.

    When leaving the UK remember to tell HMRC (form P85) just to log with them a date when you left. They did then write to my tenant to tell him he didn't need to withhold any rent for tax so not sure how that will work for you if you have multiple property income taking you over the tax free allowance.

  7. #7

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    Nov 2018
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    23

    Yep its an NRLi form to get your rent paid without deductions for tax - had to do one for each place (painful). I will deffo be over the tax allowance hence will be paying tax in UK....also painful but such is life!


  8. #8

    Join Date
    Nov 2004
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    17

    Director

    I believe that it would be almost impossible for you not to be working for your UK company while in UK e.g. answering email?!


  9. #9

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    Nov 2018
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    I am not sure that answering the occasional email consitutes as a full days work these days. We also have group mailboxes (as well as individual accounts) so worst case i could reply from there. Realistically, whilst i may answer the occasional mail whilst in uk, my primary purpose when here will be to visit family.


  10. #10

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    Oct 2010
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    19,587
    Quote Originally Posted by stickyears
    Note that even if you are not UK tax resident, assuming you are a British citizen, you will still need to pay tax on any income arising in the UK.
    I think even if he is not a British citizen, he would still be liable for UK tax on income arising in the UK. My wife is not British and she is liable for British income tax on her rental income in the UK.

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