[brighton]

Hi All

I'm a British subject and currently considering a job offer to work in Hong Kong. Once I'm living and working in Hong Kong, anyone knows what the Tax Liability from a UK point of view?

Any advice would be greatly appreciated.

[PDLM]

Once you become resident in Hong Kong you have no liability on your income arising from your employment in Hong Kong (unless you spend a very significant proportion of your time in the UK). You retain tax liability for any property income (if you own a home in the UK and are letting it out, for example) and for some other investment income.

The Inland Revenue has lots of information on its website. Start here:
http://www.direct.gov.uk/MoneyTaxAnd...ntoTheUK/fs/en

[Pekkerhead]

RE property. that's not strictly true.

actually if you are going to be out of the country (UK) for more than 180 days in the first year, your liability for letting your property should also be waived. I received my exemption a couple of months back.

If you are letting via an agency they should be able to give you the exemption form to fill out, and the IR will look at your case and see whether you qualify. If not you should be able to download it from the IR website (sorry can't remember form number).

You may be granted temporary exemption while they examine your case more in depth.

[PhilE]

Pekkerhead - PDLM *is* correct - you will be liable for tax on all rental income earned from letting a UK property. The form you refer to allows your letting agent (or tenant if there is no agent) to ignore any tax deductions and pay you the gross rental income each month. However, it does not exempt you from paying UK tax on that income in due course - you will need to declare such income (less any allowable deductions) in your UK tax return for each tax year that you are non-resident.

Brighton - its a complex area but if your financial affairs are pretty simple, its not too much of a nightmare to manage. The key thing to watch is that you should be non-resident from the UK for a complete April -> March tax year. If you do not achieve this, you will find it difficult to avoid UK tax on your Hong Kong income. If you do achieve it (and also stay out of the UK for approx 75% of each period of non-residence in each tax year), your HK income will be UK tax free. It starts getting more complex if you regularly buy/sell shares, property etc (i.e. capital gains rules).

On the plus side, taxation in HK is nice and straightforward!

[Pekkerhead]

PhilE - aah shucks, you mean I have to pay it all back again!!! I've already put the Ferrari on order.

[Katanga]

another thing to bear in mind is that even when you are non-resident in the UK, you are allowed your annual tax allowances.

This means that you get upto the first 3700 pounds or so as tax free.

Any dividends you receive will still be "taxed at source" at 10% and is not offsetable against the allowance. However, all bank interest within the allowance is refunded. Even better is to tell your bank that you want the interest paid gross and they will send you the appropriate forms.

Therefore, as long as you tell the tax man that you are going non-resident and don't spend more than about 20% of your time in the UK, all your HK income will be at HK tax rates only and you do not have to declare it to the UK tax man (Even if it is physically paid in the UK!!!)

I am not an expert on rental income but the little I know, you are allowed to off-set the mortgage interest against the rental income.

So....overall, unless you have shit loads of dosh, stocks and properties in the UK, you are unlikely to pay UK tax. Of course if you have rather compex affairs then get an accountant !

[PhilE]

Pekkerhead - hey, at least you can earn a bit of interest on the cash until the tax man demands it back. Suzuki Liana maybe?

Katanga - have you been away from the UK for a while? I got my 06/07 tax coding today and the personal allowance is now over 5000 GBP... so you're right, if you have a mortgage, let your property, and don't have much in the way of other income, you probably won't pay any income tax - at least in any full tax year of non-residence. Even better if there are 2 of you and you're splitting the rental income 50:50.

[Pekkerhead]

Originally Posted by PhilE

Pekkerhead - hey, at least you can earn a bit of interest on the cash until the tax man demands it back. Suzuki Liana maybe?

hmmm, I was thinking more like a Fiat Panda or a 50cc moped.

Actually what is the case when the mortgage isn't quite being covered by the rental income (as in my case I still have to cover about 100 quid per month). Bearing in mind I am registered as NRL and have no intention of going back to the UK for at least 2 years (and even then only for a quick trip - 1 week maybe) and have no income here? (let the missus do all the hard work I say)

[brighton]

That's kinda what I thought. It sounds like the key here is to observe the defination of a "non resident" status.

How about moving saving or property proceeds back into the UK after the HK stay?

[HKNewBi]

Originally Posted by Pekkerhead

Actually what is the case when the mortgage isn't quite being covered by the rental income (as in my case I still have to cover about 100 quid per month).

Remember it is only the INTEREST component of the mortgage you can offset (seems fair, no tax deduction on your primary home, but you can tax deduct from your rental investments, nice one IR!).

Ie if your repayments are 1000 a month, 400 might be capital repayment and 600 might be interest, for sake of demonstration. You can only deduct the 600 a month from your rental income. The other 400 you are using to repay debt (so you are in effect 400 richer each month, so isn't a cost).

You can also claim 10% of your total rental as wear and tear. Apply your allowances and you should be able to reduce that tax bill significantly.

Remember, if you sell the property you are liable for Capital Gains Tax (CGT) on the profit. There are various deductions and it depends on whether or not the place was your Primary Place of Residence (PPR) within the last 3 years.

You will be subject to CGT if you return to the UK within 5 years of moving to Hong Kong. So if you do sell now, make allowances for a tax bill if you return in 2 years time.