Tax on overseas work (Should I really pay ?)

Jul 19, 2006 1 Replies

Dear All,



I recently started a 1 year(ish) contract in the Middle East on 1st March this year. Prior to then, I filled out lots of forms etc for inland revenue to notify them of my status. I recently had a letter from them saying that I will be treated as resident and ordinally resident and will have my foreign income subject to UK tax. I have read all the leaflets etc and this as far as I can see only applies if I spend more than 183 days in the UK in the tax year. Since I am only having 20 days annual year for the year this is unlikely to happen!



I have appealed - Seems little point having ex-pat status if I end up a large tax bill at the end of it. I am due to come back to the UK on 1st March 2007, but may stay out for an extra month so I am clear of a complete tax year. I am paid by a Bahrain company and have a residence permit, work permit etc, so I cannot see what the problem could be



Anyone able to help me to clarify ?



Thanks C


If you will be away for the full tax year the IR will normally treat you as non-resident. I guess it could be they are not yet convinced you will spend the whole year; obviously there is cash flow advantage to be recognised as non-resident from the beginning. E.g. if you tell the revenue you will be away for a 'year-ish' or if your contract implies you will not be away for a complete tax year.

In short I don't think a final decision is made until the end of the tax year.

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