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Tax and working abroad

Discussion in 'Teaching abroad' started by 10B, Jun 4, 2020.

  1. 10B

    10B New commenter

    I am hoping to start work in China in August ( I know ), Does anyone know the tax situation as a UK national looking to work in China?
  2. the hippo

    the hippo Lead commenter Community helper

    If you do not want the Great British Taxman to get his sticky fingers on your dosh, then you need to contact HMRC and become "non-resident". You might even get a tax refund!
    10B likes this.
  3. Duraz

    Duraz New commenter

    Basically if you are working abroad full-time then you will be non-resident in the UK and will not pay income tax on income earned abroad. There's obviously a bit more to it than that though. Here are the details:
    10B likes this.
  4. 10B

    10B New commenter

    Hi Hippo,
    Thank you
  5. 10B

    10B New commenter

    Thank Duraz, shall take a look at the info.
  6. RoadToRags

    RoadToRags New commenter

    10B likes this.
  7. TeacherMan19

    TeacherMan19 Occasional commenter

    For China, if you live in China for 183+ days a year then you are considered tax resident and pay your tax there.
    10B likes this.
  8. TeacherMan19

    TeacherMan19 Occasional commenter

    It is also a tax system which increases and decreases through the year. So you will pay more tax on money earned in July than you will in December.
    10B likes this.
  9. 10B

    10B New commenter

    Hi, Thank you for the solid advice. The Inland revenue said it was all about who owned the school, not where the school was based.So if the School was registered in the UK even though it was functioning in branches all over the world, tax would be payable in the UK. Alarming.I shall follow the working abroad guidance on the UK Gov site which refers to the 183 working days out of the UK.
  10. Mitochondria1

    Mitochondria1 Occasional commenter

    Absolute horse excrement, otherwise I would have paid zero tax in the past having worked for a company hosted in a tax haven.
  11. the hippo

    the hippo Lead commenter Community helper

    Even though I do not agree with Mitochondrial's choice of language, I really must agree with him. If you are registered as being "non-resident" with the HMRC, then you will not have to pay taxes on your income to the HMRC, even if the school in foreign parts were to be owned by a British company or the Queen or a Martian. If you are non-resident, then you do not live in the UK and so you do not have to pay British taxes. I would have thought that was so simple that even a smelly old hippo could understand it.

    On the other hand, it was quite a few years ago that the pachyderm became "non-resident" and so things maybe perhaps have changed.
  12. shazzamac

    shazzamac New commenter

    I'm in China. I do not pay UK tax on income here.
    If you have a property and rent it out, that counts as UK income. You need to send a tax return. If income under 11k, no tax to pay.
    10B likes this.
  13. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Sounds like a misunderstanding somewhere along the line between how businesses are taxed and how employee income tax/NI works.

    The tax regime for businesses (Corporation Tax) can work differently depending on whether the overseas operation has been set up as a branch of the UK company, or whether a new subsidiary company has been set up overseas (although I don't know the details of what's different)

    PS Not been called Inland Revenue since 2005! HMRC now (HM Revenue and Customs)
    10B likes this.
  14. 10B

    10B New commenter

    Thanks Rott Weiler - I was clearly speaking with an over keen HMRC adviser. Glad thats been de mystified. Happy now.
  15. GeordieKC

    GeordieKC Occasional commenter

    Never heard of this for tax, but it does sound like rules relating to National Insurance in your first 52 weeks abroad from https://www.gov.uk/national-insurance-if-you-go-abroad#:~:text=Voluntary contributions,the country where you live.

    Working in any other country
    You’ll carry on paying National Insurance for the first 52 weeks you’re abroad if you’re working for an employer outside the EEA, Switzerland and bilateral Social Security agreement countries, and you meet the following 3 conditions:
    • your employer has a place of business in the UK
    • you’re ordinarily resident in the UK
    • you were living in the UK immediately before starting work abroad
    However I think you can simply not pay for the first 52 weeks without any adverse consequences and thereafter pay voluntary contributions. Also worth noting that most rent-a-name schools do not have a place of business in the UK, they are overseas company with an arrangement with a UK school
  16. markedout

    markedout Occasional commenter

    When I left the UK in August 2018, I applied to pay voluntary NI and was told that I could not start paying until the new tax year started, so I had to reapply in April 2019 and have been paying contributions since about August 2019 - they had a large backlog, apparently!
  17. the hippo

    the hippo Lead commenter Community helper

    Yes, you WILL have to pay some taxes in the UK if you have property and / or other investments in the UK. This will be the case even if you are "non-resident". I would agree with markedout that it is worth paying your NI contributions, so that you will eventually get a UK pension.

    My TPS pension would not go far in the UK, but here in Bulgaria it is really worth having.
  18. amysdad

    amysdad Established commenter

    First - you won't be "ordinarily resident" in the UK. You are living and working overseas - this section is designed for people who are temporarily relocated (eg work for Google normally in London, but seconded for a year to California).

    Two things to note on Chinese taxation. First, you will be considered as 'non resident' if you are in China for less than 183 days per year - effectively, that means your first term from August to Christmas. After that you will be considered resident and you can complete a form certifying this. We've done that this year, but it will be interesting to see how COVID-19 border closures are factored in (if at all.)

    Second, the taxation in China is cumulative - that means that unlike the UK, where you're taxed on your notional annual income, the amount of tax varies depending on the month of the year. It's geared up so that you pay less tax in January (the lead up to the mass travel at CNY meaning most Chinese need cash then) and it increases each month until December (which hurts - because that's when we need it!) My experience was that my take home pay varies by as much as £500 - £700 between January and December.

    If you have income from a property rental or other investments, then you will have to pay tax on that in the UK by self assessment. The Chinese did look at trying to get their hands on this a couple of years ago and the threat of it hasn't quite gone away, but they aren't doing anything at the moment.
  19. RoadToRags

    RoadToRags New commenter

    Schools can also smooth out the taxes so that you pay the same amount each month, rather than it varying. You pay the same amount, but it is less confusing. This would be at the school’s discretion though.
  20. TusitalaH

    TusitalaH New commenter

    Yes our school does this.

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