UK/English Tax Q&A

[Epistemology]

Ok, I have the definitive answer from the UK tax office. Basically....If you are staying in Korea for one year only, DO NOT get the residency certificate as you will be liable for tax on any worldwide income you earn. Elect instead to pay Korean taxes.
If you are staying in Korea for more than 1 year, Get the residency certificate as you will not be eligible to pay taxes on worldwide income, provided you are outside the country for over one tax year.

Thank you for contacting HMRC.

If you had only gone abroad for 12 months, and the period did not include a full tax year, you would have remained UK tax-resident and you would be chargeable to UK tax on your worldwide income. As you will be outside of the UK for a period including a full tax year, you will be regarded as non-resident for tax purposes and will not be liable to UK tax on your foreign earnings. I would recommend that you read the guidance in the booklet HMRC6. I am attaching a copy for you to refer to.

I think that finally settles that. At long last.

[flasyb]

Ok, I have the definitive answer from the UK tax office. Basically....If you are staying in Korea for one year only, DO NOT get the residency certificate as you will be liable for tax on any worldwide income you earn. Elect instead to pay Korean taxes.
If you are staying in Korea for more than 1 year, Get the residency certificate as you will not be eligible to pay taxes on worldwide income, provided you are outside the country for over one tax year.

Thank you for contacting HMRC.

If you had only gone abroad for 12 months, and the period did not include a full tax year, you would have remained UK tax-resident and you would be chargeable to UK tax on your worldwide income. As you will be outside of the UK for a period including a full tax year, you will be regarded as non-resident for tax purposes and will not be liable to UK tax on your foreign earnings. I would recommend that you read the guidance in the booklet HMRC6. I am attaching a copy for you to refer to.

I think that finally settles that. At long last.

Nice work, mate! Very nice. Backs up everything I've been saying.

I'd like to make one small point though. The emphasis here is on the tax year. The tax year currently runs from the 6th of April to the 5th of April the following year. If you're out for that period of time, for the whole time, you will not have pay tax because you would be non-resident for the tax year. If anyone only comes to Korea for 1 year but is out of the country for the full duration between these dates, I'd say get the certificate too. Your passport stamps will prove this easily.

Another caveat is that if you have property in the UK and kids in school and suchlike back in the UK, there's a good chance you'll be considered a resident anyway - you gotta pay tax if you're using UK services.

However, I reckon that for the vast majority of UK citizens teaching in Korea, the stuff in the email that Epistemology received will apply to all of us.

[Epistemology]

Its now only good for one year if you change schools or POE. As long as you stay at the same school for 2 years, you are good to go.

[tinnuche231285]

I've been here for 8 months now paying the lowest rate of Korean income tax which is peanuts compared to the British rate. Haven't heard from the Inland Revenue and fingers crossed I won't. I have just been contacted by the people at Student Loans though and if I don't declare to them how much I've been earning then they say they will charge me 150 quid.

[gangwon]

Student loans can charge you a standard rate of about 150 pounds per month if you don't fill out an overseas assessment form. If you do, you'll have to pay around 35 pounds per month, depending on your wage over here. However, I didn't tell student loans I was abroad for 4 years and they didn't charge me anything. I'm only paying now to start clearing it now that we don't have the 0% interest rate.

Charlie

[ross.d]

I don't have a Residency Certificate was asked by my school, so I phoned the inland revenue and talked to an expert who advised me that because I didnt plan to come back to the UK between the tax year 2012-2013 then I was no longer a resident so didn't require a Certificate and to quote they "don't care about my earnings in Korea" so I am just going to pay Korean tax. Has anybody had an experience like this, I am still tempted to get the certificate and give to my school

[v15ben]

Just been looking through this thread, very useful indeed.

Quick query though.

I am a UK citizen with EPIK (filed a P85 before I left in August 2010) and haven't paid UK tax since. I am considering renewing for a 3rd year and wondered if there are any documents I need to fill in either in Korea or from the UK regarding my taxes for my 3rd year. Is the progressive tax method something that is organised by my school or do I have to fill out forms and tell them (and HMRC?) that I am here for a 3rd year?

[blanco]

I have found these two links to be useful:


http://www.macfarlanes.com/media/572269/certificate%20of%20uk%20tax%20residence%20-%20ajc.pdf

http://www.hmrc.gov.uk/news/cert-of-residence.htm

[eliza0506]

Hey guys,

Just wanted to give a definitive answer on this as it is a massive grey area! So I was in Korea for 1 yr Aug 10-Aug 11. I paid some minimal tax originally but submitted a proof of residency and then had any tax rebated. I've just completed a tax return for my time in Korea and had to pay UK tax. I'd recommend getting the proof of residency because even if you have paid tax in Korea, this amount is then deducted as foreign tax credits, which are an absolute nightmare to calculate so best to save yourself the hassle. The old law stating that if you are out of the country for 365 consecutively you are not liable to pay tax does no longer stand, HOWEVER I was told by HMRC that if you are out of the country for a full tax year i.e. April - April that you are not liable to pay tax. This does not seem fair as it means those entering Korea in March will more than likely be able to dodge this, while those entering in August like myself, will find themselves caught out. I went travelling after finishing in Korea for 4 months, however was told had I stayed out til April that I would not have had to pay! Doesn't seem right, I think they are still figuring things out.

However...I gotta say when speaking to people they've all responsed with 'What, you paid tax here? Sure you didn't live here!' Which I gotta say I agree with! So I'm sure there are loooads of people who just keep schtum about where they've been / what they've been doing. I had previously told student loans company what I was doing so I couldn't exactly backtrack but yeah...definitely something to think about.

Anyway hope this helps!!

[minevj]

I did not get charged tax the whole of last year (2011) but now in Feb there is suddenly a tax payment on my pay slip. Don't know what that is about because I handed my home tax number and proof of residency at the beinning of last year.

[terri]

Is it possible for me to obtain a residency certificate from the uk despite already being in Korea? The first I had heard of it was when my co-teacher asked for it yesterday. I told her I didn't have one and she looked horrified. 

[leedseoul]

Is it possible for me to obtain a residency certificate from the uk despite already being in Korea? The first I had heard of it was when my co-teacher asked for it yesterday. I told her I didn't have one and she looked horrified. 

Yes it's possible.  I contacted HMRC through this form: https://online.hmrc.gov.uk/shortforms/form/CNR_Claims_SEF?dept-name=CNR&sub-dept-name=&location=26&origin=http://www.hmrc.gov.uk

I explained the situation, and they sent me a signed electronic copy of the certificate which I simply had to print out.  My school/education board accepted it with no problems. 

However, I will be staying in Korea long-term.  If you have UK resident status and are only planning to be here for less than a couple of years, it's probably better to pay Korean tax. If you exempt yourself from Korean taxes, you will have to pay tax back in the UK for all earnings in Korea during the UK tax year you return in.

[gangwon]

If you have UK resident status and are only planning to be here for less than a couple of years, it's probably better to pay Korean tax. If you exempt yourself from Korean taxes, you will have to pay tax back in the UK for all earnings in Korea during the UK tax year you return in.

Not true if you are out of the UK for an entire tax year. If you working here or out of the UK for a period of time that includes a complete April to April then you will not pay UK taxes and with the residency certificate you will also be exempt from SK taxes. So if you are March intake and work one year but travel for a month before returning to the UK it's still works in your favour.

[leedseoul]

If you have UK resident status and are only planning to be here for less than a couple of years, it's probably better to pay Korean tax. If you exempt yourself from Korean taxes, you will have to pay tax back in the UK for all earnings in Korea during the UK tax year you return in.

Not true if you are out of the UK for an entire tax year. If you working here or out of the UK for a period of time that includes a complete April to April then you will not pay UK taxes and with the residency certificate you will also be exempt from SK taxes. So if you are March intake and work one year but travel for a month before returning to the UK it's still works in your favour.

That's correct, but unfortunately the majority of people (September starters and Hagwon teachers) who are here for a year won't be outside the UK for a perfect April-April tax year.
I worded the original msg confusingly, it should be that.... have to pay tax back for all earnings made in Korea that were within the UK tax year you return in.

[flasyb]

If you have UK resident status and are only planning to be here for less than a couple of years, it's probably better to pay Korean tax. If you exempt yourself from Korean taxes, you will have to pay tax back in the UK for all earnings in Korea during the UK tax year you return in.

Not true if you are out of the UK for an entire tax year. If you working here or out of the UK for a period of time that includes a complete April to April then you will not pay UK taxes and with the residency certificate you will also be exempt from SK taxes. So if you are March intake and work one year but travel for a month before returning to the UK it's still works in your favour.

That's correct, but unfortunately the majority of people (September starters and Hagwon teachers) who are here for a year won't be outside the UK for a perfect April-April tax year.
I worded the original msg confusingly, it should be that.... have to pay tax back for all earnings made in Korea that were within the UK tax year you return in.

Not if you apply for "split residency" which is where you are resident in Korea for part of the tax year and resident in the UK for part of the tax year. If you do that the only tax you will pay in the UK is on money that you earned there.

[RobOak]

   I think you should have completed a p85 BEFORE YOU LEFT THE UK. To get the double taxation thing sorted.  If like me you own a property in the UK but are resident overseas you will still need to pay tax on the income from it, I believe.
Rob

[stevieg4ever]

useful information,thanks guys.

[ndrwwlltts]

As someone who applied for a certificate before the 15 day standard processing time I was informed of by HMRC, I advise anyone thinking of getting one before they leave the UK to try and complete the online form at least one month before, as they only just sent it to my home address in the UK now (more than a month after I applied for it, with them citing administrative pressures).