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Old 17.06.2011, 22:13
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HMRC UK tax on Swiss Income

Can anyone clarify the UK tax liability on Swiss income. Like many others I am here on contract via a payroll company, pay Swiss tax et al. I rang HMRC today and was told that as I am technically still resident in the UK (have house, cars, investment property) and therefore need to declare my worldwide income on my UK tax return. I would then pay HMRC income tax less that already paid to the Swiss ... there may be a further issue with National insurance .... The UK tax rate is significantly higher so I' like to avoid it if possible ..... Any advice on how to arrange things properly ....

To rub salt into the wound, they said expenses such as flights, rent etc... are NOT deductible ... being considered expenses not incurred in actually doing my work (much like buying a season ticket to travel into London).

Of course I will seek professional advice but I'd appreciate it if others could share their experience .... TIA
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Old 17.06.2011, 22:16
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Re: HMRC UK tax on Swiss Income

Grether MacGeorge would be your best bet.
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Old 17.06.2011, 22:28
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Re: HMRC UK tax on Swiss Income

not enough information to provide an answer.
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Old 17.06.2011, 22:55
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Re: HMRC UK tax on Swiss Income

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Can anyone clarify the UK tax liability on Swiss income. Like many others I am here on contract via a payroll company, pay Swiss tax et al. I rang HMRC today and was told that as I am technically still resident in the UK (have house, cars, investment property) and therefore need to declare my worldwide income on my UK tax return. I would then pay HMRC income tax less that already paid to the Swiss ... there may be a further issue with National insurance .... The UK tax rate is significantly higher so I' like to avoid it if possible ..... Any advice on how to arrange things properly ....

To rub salt into the wound, they said expenses such as flights, rent etc... are NOT deductible ... being considered expenses not incurred in actually doing my work (much like buying a season ticket to travel into London).

Of course I will seek professional advice but I'd appreciate it if others could share their experience .... TIA
How long is your contract? you would have to leave the UK, a tax year and a day would do for overseas income, but not capital gains which needs to 'permanantly' leave UK & property should not be available for your use.
I don't think NI is an issue, probably worth paying volantry contributions unless you have already got 30 years.
As you have an investment property you should take advice if you have any potential capital gains, however I think you need to be away for 5? years now, it changed since I have been living here.
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Old 17.06.2011, 23:25
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Re: HMRC UK tax on Swiss Income

You need to tell HMRC that you are leaving the UK and will no longer be UK resident. Having property, investments etc is irrelevant for residency purposes - the main issue is the amount of time you spend in the UK. I believe it is 90 days max per year, but would need to double check this.

From the point at which you become non-resident you will only be liable for tax on your UK income (eg rental and investment income), and there should be a double tax treaty with Switzerland as well to stop you being taxed twice although I again haven't got as far as understanding all the details yet.
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Old 17.06.2011, 23:31
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Re: HMRC UK tax on Swiss Income

Thanks - it was my basic understanding that being out of the Uk for a tax year, minimal visits to to UK, reducing residency indicators such property, cars, directorships, and ongoing trade would suffice.

I'm just surprised that many people assume no UK liability ... which won't be good if Hector gets wind

Is a P85 required ? and can anybody confirm the expenses situation.
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Old 17.06.2011, 23:40
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Re: HMRC UK tax on Swiss Income

Thanks GenevaSculler - I know I wouldn't be taxed twice, so HMRC would deduct the Swiss tax from the UK tax liability. The issue is that I don't want to pay the UK anything extra ..... and alot extra !

Basically UK residents (UK citizens or not) pay HMRC rates on Swiss income, and expenses are not deductible .......... unfair !
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Old 18.06.2011, 00:11
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Re: HMRC UK tax on Swiss Income

There is some info on this link but every situation can vary so getting individual advice is the only way to be completely sure. We contacted a tax expert and had a free consultation that confirmed that we met the non-resident conditions and this is what we were told:

The main thing is to make sure you are considered non-resident for tax purposes. You can still have a home/assets in the uk but you should be in full time employment abroad - paid by that country. You then do need to fill out a P85 - how you fill this is can affect your being 'non- resident' so if you're not sure - have a tax person look it over before submitting. You will need to be employed outside the Uk for a year - if you go back to the UK before this time you will be taxed. Then you can only be in the UK for an average of 90 days over a rolling 4 year period (max of 183 in one tax year - but to be safe stick to the 90 per year).

HMRC UK tax on Swiss Income
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Old 18.06.2011, 10:54
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Re: HMRC UK tax on Swiss Income

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Having property, investments etc is irrelevant for residency purposes - the main issue is the amount of time you spend in the UK. I believe it is 90 days max per year, but would need to double check this.
.
The first bit is not true, there was a large case in the High Court last year, a man had lived outside the UK for over 20 years however he still had a house in the UK & his children were at school in the UK. He also had a UK mobile phone. The revenue argued that he had never really left, the UK was still the centre of his life & he had to pay back taxes for all those years.
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Old 18.06.2011, 11:10
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Re: HMRC UK tax on Swiss Income

The UK tax you pay may depend on whether you're 'resident', 'ordinarily resident' or 'domiciled' in the UK. You can be more than one of these - or none.

http://www.hmrc.gov.uk/cnr/simple-gu...-residence.pdf

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

"• Family ties include having a spouse, civil partner, children or other family
members you are close to, in the UK.
• Social ties include membership of clubs and societies and events that you
regularly attend or host. It also includes any regular recreational engagement,
such as returning each year for an annual sporting season.
• Business ties include owning or being a director of a business based in the
UK, or having employment, including self-employment, in the UK. Regular
employment duties in the UK are a tie and you need to consider the extent,
frequency and nature of those duties. It does not matter if the duties
themselves are not taxed, for example because of a DTA.
• Property ties include a house or apartment that you own or lease, or property
held primarily for investment but that also provides you with accommodation
when you are in the UK. A house or apartment provided for your use for the
duration of your time in the UK as part of an employment package is
‘available accommodation’ and is a tie to the UK."
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Old 18.06.2011, 13:55
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Re: HMRC UK tax on Swiss Income

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Can anyone clarify the UK tax liability on Swiss income. Like many others I am here on contract via a payroll company, pay Swiss tax et al. I rang HMRC today and was told that as I am technically still resident in the UK (have house, cars, investment property) and therefore need to declare my worldwide income on my UK tax return. I would then pay HMRC income tax less that already paid to the Swiss ... there may be a further issue with National insurance .... The UK tax rate is significantly higher so I' like to avoid it if possible ..... Any advice on how to arrange things properly ....

To rub salt into the wound, they said expenses such as flights, rent etc... are NOT deductible ... being considered expenses not incurred in actually doing my work (much like buying a season ticket to travel into London).

Of course I will seek professional advice but I'd appreciate it if others could share their experience .... TIA
There are many things you can offset against Swiss tax which are not allowed in UK, example, alimony payments - sad but true.

As others stated you have to be genuinely no longer UK tax resident to avoid paying UK taxes. I doubt you can do that retrospectively

Also from your brief description of your circumstances (have house, cars, investment property) I personally doubt you can claim non resident; for this you would need advice from a good (& no doubt expensive) international tax lawyer.
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Old 18.06.2011, 14:23
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Re: HMRC UK tax on Swiss Income

Thanks for the links, fatmanfilms. In the second document, section 8.5 (getting full time employment abroad) seems rather easy to understand and implies, at least to me, that all the other stuff about owning investments etc. in the UK aren't relevant.
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Old 18.06.2011, 14:52
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Re: HMRC UK tax on Swiss Income

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Thanks for the links, fatmanfilms. In the second document, section 8.5 (getting full time employment abroad) seems rather easy to understand and implies, at least to me, that all the other stuff about owning investments etc. in the UK aren't relevant.
Hi Adrian,

The OP did not state that he will be working in CH for more than a full UK tax year, so it's really not clear.

The HMRC are looking to get money from 'wealthy' people leaving the UK, if you are not wealthy & spend most of your income every month, they will have no interest in you so it's easy to 'escape'.

As the OP has investment property, where there could be capital gains taxes to pay, it could be a very different story, which is why the second link is so long winded & complicated.
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Old 18.06.2011, 18:34
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Re: HMRC UK tax on Swiss Income

Start by filling in the P85.

The duration questions being asked here are on there.

It's all about when you expect to return and the number of visits and duration you will spend in the UK.

With the P85 submitted HMRC will determine your residency status.

If your intention is to work here for a period that takes in a full UK tax year and you don't visit the UK too often then it's hard to see why you'd still be a UK resident.
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Old 18.06.2011, 18:39
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Re: HMRC UK tax on Swiss Income

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Start by filling in the P85.

The duration questions being asked here are on there.

It's all about when you expect to return and the number of visits and duration you will spend in the UK.

With the P85 submitted HMRC will determine your residency status.

If your intention is to work here for a period that takes in a full UK tax year and you don't visit the UK too often then it's hard to see why you'd still be a UK resident.
Intention is not enough! You actually have to be employed for a full tax year without any breaks, self employment is not acceptable!

If he has a family & they stayed in the UK he would still be ordinarily resident in the UK, as he is retaining property he has to be very careful to show he has really left.

Last edited by fatmanfilms; 18.06.2011 at 18:53.
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Old 18.06.2011, 20:17
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Re: HMRC UK tax on Swiss Income

Yes yes.

I know from experience that intention is enough. I came here on a 12 contract that started 3 April 2008 and so its end date was 2 April 2009. BUT it was my intention to live and work in Switzerland. I answered all the questions on the P85 to this end. HMRC answered my P85 submission stating "You will be treated as not resident and not ordinarily resident in the UK from 3 April 2008."

Btw self employment in CH is not really as it seems. Although I acted and behaved like a contractor I was actually a full time employee of the software house I was contracted through. In essence I had a full time job in Switzerland.

For sure if the OP has a wife and children in the UK residing in what is still the family home then the waters are somewhat muddied.
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Old 18.06.2011, 21:33
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Re: HMRC UK tax on Swiss Income

Hi,

If you intend to be away for more than a tax year & loose your job, you have to inform the UK revenue as you will then be liable to UK tax. The P85 is only a temporary approval.

As you say "You will be treated as not resident and not ordinarily resident in the UK from 3 April 2008." , that is assuming you actually do work for the period you said you would.

Intention alone is not enough!

If the OP has a wife & children in the UK, it's quite clear & not muddied!


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Yes yes.

I know from experience that intention is enough. I came here on a 12 contract that started 3 April 2008 and so its end date was 2 April 2009. BUT it was my intention to live and work in Switzerland. I answered all the questions on the P85 to this end. HMRC answered my P85 submission stating "You will be treated as not resident and not ordinarily resident in the UK from 3 April 2008."

Btw self employment in CH is not really as it seems. Although I acted and behaved like a contractor I was actually a full time employee of the software house I was contracted through. In essence I had a full time job in Switzerland.

For sure if the OP has a wife and children in the UK residing in what is still the family home then the waters are somewhat muddied.
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Old 18.06.2011, 22:14
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Re: HMRC UK tax on Swiss Income

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The UK tax you pay may depend on whether you're 'resident', 'ordinarily resident' or 'domiciled' in the UK. You can be more than one of these - or none.

http://www.hmrc.gov.uk/cnr/simple-gu...-residence.pdf

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

"• Family ties include having a spouse, civil partner, children or other family
members you are close to, in the UK.
• Social ties include membership of clubs and societies and events that you
regularly attend or host. It also includes any regular recreational engagement,
such as returning each year for an annual sporting season.
• Business ties include owning or being a director of a business based in the
UK, or having employment, including self-employment, in the UK. Regular
employment duties in the UK are a tie and you need to consider the extent,
frequency and nature of those duties. It does not matter if the duties
themselves are not taxed, for example because of a DTA.
• Property ties include a house or apartment that you own or lease, or property
held primarily for investment but that also provides you with accommodation
when you are in the UK. A house or apartment provided for your use for the
duration of your time in the UK as part of an employment package is
‘available accommodation’ and is a tie to the UK."
Quote:
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Thanks - it was my basic understanding that being out of the Uk for a tax year, minimal visits to to UK, reducing residency indicators such property, cars, directorships, and ongoing trade would suffice.

I'm just surprised that many people assume no UK liability ... which won't be good if Hector gets wind

Is a P85 required ? and can anybody confirm the expenses situation.
Spending less than 90 days a year in the UK means you aren't liable for income tax on money earned outside the UK, irrelevant of anything else. All the rest are to do with domicile which for a normal Brit is practically impossible to shake and almost exclusively concerns IHT (although technically you could move back to the UK as a non-dom and not be liable for non-UK sourced, non-UK remitted income practically you'd reacquire domicility by moving back there so it's irrelevant again).

A P85 isn't required. You'd, for example, only have a P85 (and a tax office) if you'd worked in the UK, and you don't need to have worked in the UK to work abroad (obviously). However it is polite and it's the best way to get your interest in UK bank accounts paid gross to you if that matters to you. What it isn't is proof that you've been out the country for more than 275 days a year.
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Old 18.06.2011, 22:19
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Re: HMRC UK tax on Swiss Income

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Intention is not enough! You actually have to be employed for a full tax year without any breaks, self employment is not acceptable!

If he has a family & they stayed in the UK he would still be ordinarily resident in the UK, as he is retaining property he has to be very careful to show he has really left.
Ordinary residence is irrelevant in this situation, but for this definition intention is in fact everything (you must intent to stay in the UK for at least three years). However for income tax what matters is where you live most of the time (where you're resident) and for this it's the 91 day rule (it's taken as an average over a total of 4 years - in any one years you're allowed 183 days but you need to make up the average over a total of 4 years).
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Old 18.06.2011, 22:30
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Re: HMRC UK tax on Swiss Income

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Ordinary residence is irrelevant in this situation, but for this definition intention is in fact everything (you must intent to stay in the UK for at least three years). However for income tax what matters is where you live most of the time (where you're resident) and for this it's the 91 day rule (it's taken as an average over a total of 4 years - in any one years you're allowed 183 days but you need to make up the average over a total of 4 years).
What your saying was correct untill 2 years ago when the Inland Revenue won a landmark case, now it's different. I have provided the links, if you don't believe me thats fine. However the UK tax system is now self assesment so your can end up with huge fines by getting it wrong.

As the OP has phoned up the Revenue & they said he would be treated as being UK resident, I suspect what I am saying is correct. The 91 day rule had never been tested in court before, since then the goalposts moved!

Best
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