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Discussion Starter #1
Hello,
I am hoping someone out there can help me out and shed some light on the double taxation treaties set up between the UK and other countries.
I have been offered a job, I will be based in Singapore (resident) from the end of June until December January time, then I will be moving to work for the same company in Ghana on a 4 weeks on 4 weeks off rota.
The company I will be working for will be paying my income tax both in Singapore and Ghana, my questions are such based on these earnings $8812 whilst in Singapore and $7812 whilst in Ghana.
1. Will I be liable to pay UK tax on those earnings?
2. If I am liable to pay tax, how much will I be liable to pay, in other words what would be my take home pay be (I also want to keep up my national insurance contributions)?

If anyone could give me a quick answer on this it would be much appreciated.

Regards

David
 

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Hi David,

I'm going to copy this over to the Singapore page as well-so be sure to check there for replies as well.



Good Luck

Jet Lag
 

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Jambodave, did your employer use the term "tax equalization" in discussing these overseas stints? That's what your post implies. (You can ask.) If so, they're going to compensate you in such a way that you end up with the same after tax financial outcome as you would have working in the U.K., though probably with housing and per diem benefits added. If that's the case, you'd just confirm they're continuing your U.K. national insurance contributions, and, if so, you should be all set.
 

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Discussion Starter #4 (Edited)
This is the reply my prospective employer gave when I put the question to them.
"Good morning, sorry I have no idea about the tax system in UK. But certainly your income tax in Singapore & Ghana will be paid"
They haven't mentioned national insurance.
Prospective employer is a Japanese, I will still be residing in the Scotland whilst working for them, although my sig says ex pat in Ghana.
I am basically looking for someone to tell me what my approximate take home pay after deductions would be, this will determine whether I take the job or not.
 

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I think you simply need more and more detailed information, in writing, to make a fully informed decision. And that doesn't have much to do with Singapore's or Ghana's tax codes, really.

Yes, I'm quite sure taxes "will be paid." Unfortunately you're the party responsible for paying taxes, so they will be paid. :) If your employer is providing income to pay the taxes, then in most cases that income is itself taxable. Of course they could just mean they are withholding taxes, though (except for the last paycheck), Singapore doesn't have tax withholding. So if they withhold taxes they aren't going to the government.

Let's suppose your employer pays S$8000 per month plus S$800 in taxes, and the tax on S$8000 is actually S$800. (I'm making up these numbers, but let's just assume them in this example.) Your gross income is actually S$8800, and Singapore (as most countries) would calculate tax on that. So you'd actually owe an additional S$80 in tax at a 10% tax rate, as in this example. In other words, it's not enough to "pay the taxes" in most countries, because extra compensation to pay taxes is, itself, usually taxable.

OK, coming to the U.K. side (as an ongoing U.K. resident), you'd get a foreign tax credit for Singapore income taxes paid -- S$880 per month in this case -- and then you'd pay the difference between the Singapore rate and the U.K. rate. Plus U.K. national insurance, of course. (Singapore doesn't have a social insurance program that foreign workers participate in, especially when they're short-term like you would be.) Thus your U.K. side is fairly easy to evaluate, because if your gross income goes up (and your expenses don't), you should do better on an after tax basis when everything is done.

Another major issue is tax preparation assistance. When you're dealing with 3 countries, the tax reporting and compliance itself is going to be at least somewhat complicated. Is your employer providing professional tax preparation assistance? Bear in mind the value of that assistance is usually treated as taxable income, too, so it's not enough to pay only for the assistance in order to keep you financially neutral -- there has to be a "top up" above that.

I'm not sure about Ghana (and whether you'll even be subject to tax there), but income tax rates in Singapore are generally lower than U.K. rates.

Hope that helps.
 

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I've moved this over to the Expat Tax section to see if we can find someone with a bit more knowledge of the UK tax situation. I do know that the UK has a slightly more complicated system for those who are physically absent from the country, but still considered "resident" in the UK, and I suspect that will come into play in your situation.

I'd start here: https://www.gov.uk/tax-foreign-income Evidently, it depends on how long you will be outside the UK during the tax year and whether you meet the specific terms for residence or "domicile" in the UK while you're working abroad. If not, it seems like your employer will be paying the local taxes more or less for their own convenience, and that you will need to come to some arrangement for how to deal with your UK tax responsibility.
Cheers,
Bev
 

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Discussion Starter #8
I've moved this over to the Expat Tax section to see if we can find someone with a bit more knowledge of the UK tax situation. I do know that the UK has a slightly more complicated system for those who are physically absent from the country, but still considered "resident" in the UK, and I suspect that will come into play in your situation.

I'd start here Evidently, it depends on how long you will be outside the UK during the tax year and whether you meet the specific terms for residence or "domicile" in the UK while you're working abroad. If not, it seems like your employer will be paying the local taxes more or less for their own convenience, and that you will need to come to some arrangement for how to deal with your UK tax responsibility.
Cheers,
Bev
I will still be classed as a UK resident, so therefore will be subject to paying tax in the UK.
I got this sent to me today
"The Company will be responsible for local employment taxes, payable to the assignment location Government. The Employee is responsible for his/her own taxes in the country of domicile."

So my question is if I am earning what is in my original post, what will that be taxed at in the UK, what will my take home pay be.
Will there be a clause for double taxation as my employing company will have paid income tax on my earnings in Singapore and Ghana.
If so will this be deducted from the amount of tax I will have to pay in the UK.
So for example in Singapore the company will be paying income tax of 20%, so does that mean in the UK I will have to pay 20% on my earning rather than the 40% as 20% will have been paid in Singapore????

I don't know if I am getting what I am trying to find out across correctly.
 

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Whatever happens, you can't expect the taxes paid in Singapore or Ghana to be "automatically" credited against your UK tax obligation. From what you've said so far, it sounds to me as if the employer will pay what they have to for the local taxes - income and/or "payroll taxes" (in some jurisdictions, this term refers to local social insurances).

You probably won't be subject to PAYE while working overseas, so you should expect to have to file tax declarations or returns in the UK, claiming any tax credits for income taxes taken out of your overseas earnings. (Not knowing how taxation works in either Singapore or Ghana, I can't tell you whether you can claim back any sort of credit for social insurance type taxes taken out of your paycheck.)

The other thing I suspect you will have to investigate is how the UK expects to be paid if you are working overseas. Since the employer won't be doing PAYE deductions from your pay, you'll need to either save up what you'll owe, so you'll have the money at the end of the year to settle with the tax service in the UK. Or, if the UK requires you to make interim payments, find out how and when those are due.
Cheers,
Bev
 

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There are no social insurance taxes in Singapore for foreign workers. (For permanent residents and citizens, yes, but you won't be either one of those.)

To reiterate, in Singapore (and in most countries, for that matter) even if the employer pays the income tax you still must pay income tax on the value of that tax assistance. That's called "tax-on-tax." All that said, it doesn't matter much because foreign income tax paid to Singapore should be creditable on your U.K. tax return, and the U.K. income tax rate will be higher so it will control.

So here's how you'd evaluate your offer, in simple terms. Let's suppose your employer is offering S$8000 per month plus tax payment. Your Singapore tax rate will probably be about 15% or a bit less (the "non-resident" tax rate), so your employer will pay another S$1200 per month (let's assume). That's a gross income of S$9200. Convert that to pounds and figure out your U.K. tax on that gross income, and that'll be your after-tax income before U.K. national insurance. You'll pay about 15% to Singapore (about S$1380 per month) and, after a foreign tax credit in the U.K., the rest of the tax (since it's a higher rate) to the U.K.

Your employer should be providing excellent medical insurance -- foreigners have no public medical system in Singapore (and for locals it's not like the NHS) -- but employer-provided medical insurance is not considered taxable income in Singapore (and probably not in the U.K. either, though you'd be more familiar with that). Employer-provided housing is now generally taxable income in Singapore (and probably also in the U.K. again).

No idea about Ghana, but given your work schedule you may not have tax issues in Ghana since you might be classified as a business visitor under their tax laws. However, Ghana's income tax rates also look like they're always lower than U.K. income tax rates, so U.K. rates should again determine your after-tax income.

Is your employer providing professional tax preparation assistance? If not, why not -- have you asked? As part of that assistance you would generally receive a professional tax briefing explaining your tax obligations and the income implications of tax in various countries.
 
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