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UK Legislation

Tax declaration

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Tax declaration

Postby britmex » Tue 16 Sep 2008 14:52 GMT

Hi there,

I am a UK citizen living in Mexico and have been offered a job by a US company as a consultant here in Mexico.

I would like to know whether it would be possible and feasible to declare my taxes in the UK or the US. In Mexico I will be charged around 28% tax and so am looking to reduce the tax bill.

I do not have residency in the US and have never lived there. As regards the UK I spend no more than a week per year in this country, the rest in Mexico.

I would much appreciate any tax advice that you can offer.

Thanks very much

Britmex
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Postby Lagrange » Mon 11 Feb 2013 09:06 GMT

The UK and the US tax on world wide income. And of course you cannot chose where you pay tax - why not elect to pay in Kuwait - the rate is 0! You are also confusing residency and tax which are two entirely different things. And you cannot work without a work permit.
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Postby Dave » Mon 11 Feb 2013 13:09 GMT

Lagrange wrote:The UK and the US tax on world wide income. And of course you cannot chose where you pay tax - why not elect to pay in Kuwait - the rate is 0! You are also confusing residency and tax which are two entirely different things.

I'm not a tax expert, but this isn't quite right. It's true that the US tax their citizens no matter where they are in the world, resident or not. But residency certainly affects taxation as far as the UK is concerned, as you can see by visiting the HM Revenue & Customs website:
HMRC: Meaning of "residence" and how it affects your tax

If you're not resident in the UK, then you don't pay UK tax on your income, wherever it's earned - although tax on interest earned on eg a UK onshore bank balance will be deducted at source and will be hard if not impossible to recover. [Edit: but see below]

If you are resident and ordinarily resident in the UK, then you pay UK tax on your income wherever it's earned.

It's even possible to be resident in more than one country at once, which complicates matters. Mexico and the UK do have a double taxation agreement, so if you're resident in both countries then you should be able to claim some sort of tax relief or exemption in one country or the other. But from what you're saying, you're not resident in the UK.

I can't see any way of getting US taxpayer status, since you're not a US citizen and not a resident.

I stress again, though, that I'm not a tax expert. You should seek advice from a professional if you're in any doubt.
Last edited by Dave on Sun 10 Mar 2013 02:42 GMT, edited 1 time in total.
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Postby ruggie » Sat 9 Mar 2013 10:34 GMT

If you're not resident in the UK, then you don't pay UK tax on your income, wherever it's earned

That's not quite true, either, Dave. I am resident and pay taxes in France, but the UK tax authorities insisted that I must be assessed for tax on the small amount I earn from a UK-based company that runs an online retail website. As a result, I get two different tax codes each year: a NO TAX one for my UK-based pension and another for declaration of my income from the website company.

To address the subject of the original posting: I'd be very surprised if any country allowed you to become resident (which you must if you're going to work full time in the place) and not become liable for income tax. The only way you'll get a true answer is from the country's tax office - go to your local one and ask.
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Postby Dave » Sun 10 Mar 2013 02:24 GMT

ruggie wrote:That's not quite true, either, Dave. I am resident and pay taxes in France, but the UK tax authorities insisted that I must be assessed for tax on the small amount I earn from a UK-based company that runs an online retail website.

I stand at least partly corrected, Ruggie. On the basis of this I went back and had a look at HMRC's leaflet (available as a PDF from the webpage I've linked to above) and found that even as a non-resident, you are indeed liable for UK tax for any work you've done in the UK that's not "merely incidental" to an overseas employment. In other words, to avoid taxation for work done in the UK as a non-resident:
You will have to show that there is a purpose to the work you did in the UK which enabled you to do your normal work abroad and which you could only do in the UK.


So, going back to Lagrange's comment, the UK does not tax non-residents on income earned outside the UK - but it generally does tax them on UK income, such as earnings for work done in the UK, rental income from a UK property or UK government/local authority pension payments. Here's a link to the specific page on HMRC's site:

HM Revenue & Customs: Tax on UK income or capital gains for non-UK residents

I'm still not sure exactly on what basis you were taxed, though - is it maybe because your company is specifically aimed at the UK market? Have you been working for it in the UK at all? Otherwise I'm puzzled.
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Postby ruggie » Tue 25 Jun 2013 14:07 GMT

I'm still not sure exactly on what basis you were taxed, though - is it maybe because your company is specifically aimed at the UK market? Have you been working for it in the UK at all? Otherwise I'm puzzled.


I take it this is aimed at me, Dave. I am a director, shareholder and employee (although my employment earnings are well below the UK tax threshold) of a UK-registered company that operates from a UK address. It sells online and ships goods worldwide from the main shareholder's home in Dorset. I perform my duties online, from my residence in France.

HMRC insisted that my work for this company was UK-taxable, but I have never earned more than the threshold, although I get no allowances. (I get paid £1000 a year by the company)
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Postby Kay » Tue 25 Jun 2013 14:48 GMT

I am also not qualified to advise on tax.

However, I'm curious to know why you claim to be an employee of this company as well as a director. Why be both?

Can't you just take your annual payment and put it through the company accounts as director's fees? If the director is non-res, then I don't see why they should have to pay income tax on any fees they receive.

It's possible there's a misunderstanding somewhere between HMRC and you. The company, of course, has to answer to HMRC and pay corporation tax on any profits. But a non-res director shouldn't be paying UK income tax on any fees they make in their role as a director. Should they?

Perhaps it's a classical case where it's best not to be led by advice on a forum when the solution lies with getting help from a qualified tax professional.
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