UK income tax on HK earnings

[Gentoo]

Hello, just a quick tax query I haven't found answered elsewhere:

I am UK citizen and returning to UK in June (Will have been working in HK for 12 months on a full-time contract). Due to the 12 month period crossing two tax years and me not being absent from UK for a full tax year, according to the gov.uk website (if I have understood correctly) I fullfil one of automatic tests for UK residency (even though I have been out of country for 12 months).

Does this therefore mean I am also liable for UK income tax on my HK earning (I will have paid HK income tax)? The gov.uk website seems to indicate this is the case. It looks like there is a double taxation agreement between UK and HK from what I understand too.

Anyone had similar experience? Any thoughts/advice appreciated?

[dynamco]

https://www.gov.uk/government/public...g-tax-treaties

[Pauljoecoe]

You don't have to pay tax in UK on earnings that have already been taxed in HK.

[Peaky]

You don't have to pay tax in UK on earnings that have already been taxed in HK.

Not true as far as I know. The double tax treaty means you won't pay the same tax twice (I.e. the 16.5%, or whatever is due to IRD after allowances etc.) but you will be due to pay the remainder up to the UK assessed tax charge if you are deemed tax resident there.

[Shiojiri Hiro]

This is correct. you have not broken UK tax residence, so UK tax will be due on the HK earnings. HK will have the primary taxing rights and then on the UK side you will need to file a tax return and claim the HK taxes paid as a foreign tax credit. You wont pay double tax on the HK income, but you will be held to the higher of UK or HK taxes (UK in this case).

This is just the 'first principles' position. There may be claims you can make on the UK side to reduce the UK taxes relating to qualifying travel and subsistence expenses. It's also not clear if you are an employee or self employed on the UK side - again you can look to make certain claims as deductible expenses. I would suggest you speak to an accountant/tax adviser on this however depending on your earnings and the potential tax exposure the fees might be more than the tax savings. If you were in HK for the 21/22 tax year you have some time to have a think since UK return wont be due until Jan 2023 if filing electronically.

Not true as far as I know. The double tax treaty means you won't pay the same tax twice (I.e. the 16.5%, or whatever is due to IRD after allowances etc.) but you will be due to pay the remainder up to the UK assessed tax charge if you are deemed tax resident there.

[aw451]

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[Pauljoecoe]

Not true as far as I know. The double tax treaty means you won't pay the same tax twice (I.e. the 16.5%, or whatever is due to IRD after allowances etc.) but you will be due to pay the remainder up to the UK assessed tax charge if you are deemed tax resident there.

Maybe I have not understood the op's position. Is he saying he has been resident in the UK while recieving earnings from HK? Is that the difference?

Straddling 2 tax years is no big deal as it happens all the time. Pay HK tax on HK earnings up to time you leave. Pay UK tax on money earned in UK once you return and are earning in UK. Has there been some overlap here?

[aw451]

Maybe I have not understood the op's position. Is he saying he has been resident in the UK while recieving earnings from HK? Is that the difference?

Straddling 2 tax years is no big deal as it happens all the time. Pay HK tax on HK earnings up to time you leave. Pay UK tax on money earned in UK once you return and are earning in UK. Has there been some overlap here?

OP's problem is that they didn't spend 12 months away from the UK and are therefore not eligible for split treatment.

Under "UK test" since they will have worked for a full year as a UK resident in the tax years overlapping before and after their stint in Hong Kong they will be a UK resident for both tax years.

https://www.gov.uk/tax-foreign-income/residence

[Gentoo]

Thanks all for your thoughts.