[Ponge]

Hey guys,

I am totally confused on the tax situation. As crippling as the UK tax level is at least it was Pay as You Earn, and there was no confusion!

So, basically, I earn 30k per month (21,500 salary, 8,500 housing allowance), I plan on being here for 2 years (maybe longer). How much should i be putting away each month?

Also, what should I be doing for MPF payments?

Thanks guys, I'm just very confused!

[vmlinuz]

Originally Posted by Ponge

Hey guys,

I am totally confused on the tax situation. As crippling as the UK tax level is at least it was Pay as You Earn, and there was no confusion!

So, basically, I earn 30k per month (21,500 salary, 8,500 housing allowance), I plan on being here for 2 years (maybe longer). How much should i be putting away each month?

Also, what should I be doing for MPF payments?

Thanks guys, I'm just very confused!

Either you go read the stuff on the Inland Revenue website or you get an accountant... Simple rule of thumb, however, is that if you save around 10%, or one month's income, you probably won't be too far wrong at the end of the year. Allegedly, they will ask you to pay twice as much in your first year, then balance things out later, but I haven't seen that myself because I've never quite managed a full tax year.

Also, the housing allowance may be irrelevant, unless your employer is actually paying for your housing. If they're just giving you cash, which you're then putting towards housing, it probably counts as salary unless you've done some financial engineering with it.

[larac]

Your first 100k is tax free and then the tax rate is stepped ie:40k @ 2%, 40k @7%, 40k@ 12% and the rest at 17%. I would put aside about 10-15% of your income and then you will be right.

The tax year starts 1 April and although you do have to pay more after your first year as a provision for the second year it all does work out in the end and the time frame between when you get the bill and when you have to pay it is really long so you wont get stung plus they split it into 2 payments.

Talk to your HR dept. about the housing allowance because the company has to exercise 'effective control' and do some paperwork in order for you to get the benefit.

With the MPF you don't have to join in the first year but if your company matches your contributions then join up as soon as you can to get the maximum from it. I think the contributions for you would be about $1000 per month but talk to your HR department about this one too.

[sickbeast]

Since he's a UK expat, would it be wiser for him to invest in a DIY MPF and have the funds invested offshore?

That way he can get significant tax benefits when he goes back to the UK

Just a thought...

[chimo]

Originally Posted by Ponge

Hey guys,

I am totally confused on the tax situation. As crippling as the UK tax level is at least it was Pay as You Earn, and there was no confusion!

So, basically, I earn 30k per month (21,500 salary, 8,500 housing allowance), I plan on being here for 2 years (maybe longer). How much should i be putting away each month?

Also, what should I be doing for MPF payments?

Thanks guys, I'm just very confused!

The tax system here is so simple. How on earth can you compare it to the UK? All you need to know is here:
Salaries Tax Computation

If your housing allowance is paid in cash with no rental receipts, you pay this much tax:
HKD34,495

If your housing allowance is used for rent with rental receipts, you pay this much tax:
HKD21,906
(I am assuming 13 months salary per year, this is normal for HK)

Notes for first year expats:
- You and your company doesnt have any obligation to MPF.
- I think, by law, companies are required to withhold 1 month of your salary until you pay your taxes. (I am not 100% sure about this).

[jaykay]

There is also a tax calculator on the website that does the hard work for you and also proves a point to certain people who claim to have been here for years but don't even know how to calculate HK tax!