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Hi

I am a British citizen and have been living overseas since 2005. I will be returning to the UK on 1st August 2012 after being made redundant on 31st July.

My severance payment will be made in September.

Can I confirm that, even though I will have regained UK residency from 1st August, the severance payment which will be taxed in Japan will not be subject to UK tax (even though physical payment is made after I become a UK resident)?

Also, I have interest income from UK and offshore accounts. Am I correct to assume per the split year concession, that that tax will only be applied on an accrued basis from 1st August?

Many thanks,
JS
 

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Don't know a great deal about this, so if the amount concerned is substantial, you should seek proper advice. However, as a first step I suggest you read this information on the HMRC website, as it gives some information about your query. http://www.hmrc.gov.uk/manuals/eimanual/EIM13500.htm Also suggest you read the double taxation agreement between the UK and Japan.

As far your interest is concerned, it is normally taxable on receipt, not accruals. So for example if you have a 2 year fixed interest bond and interest is paid to you on the 2nd August, it will all be subject to UK tax
 

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This may help you a little

Hi

Based on my previous life not so long ago,

You need to telephone HMRC. Your case would eventually need to be looked at by a tax inspector. DO NOT be alarmed and DO NOT attempt to work this out yourself! You do need HMRC advice or pay a very reputable accountancy firm for initial advice. This will be approx £60 per hour minimum. You WILL NOT need just one hour, believe me!

You need to record date, time and officers' names of each telephone call. DO TELL THEM that you want each contact/call to be logged on your record, if possible. This means they may require full security check, maybe 3-7 security questions. Have your NI or Self Assessment Unique Tax Ref (SA UTR or UTR) ready. If your details on their record are outdated, you could fail security check. Think about what they may have for you, write them down if needed before you call.

It is sensible to know HMRC official exchange rates from Yen to £ for this financial year. Search their site. I am not sure if the figures have been worked out yet. This year is the tax year 2012-2013 or the 2013 tax year in short.

Have all information regarding your taxable income from 6 April this year, just in case. That includes all you have mentioned, if you have had rental income, trust income, dividend and shares, you need the details (even ISA, as you were not UK resident for a while). It is very handy if you can estimate your total taxable income from 6 April this year to 5 April next year! Knowing that saves you a lot of time and accountant's fees as well as help you with annual tax plan which some people require for their own benefits! They might not ask you about all income details straight away. Besides you need to declare income and tax figures on some form such as tax return, if applicable.

When you call HMRC, don't explain too much to the first person who answers the phone, don't listen to them too much if you forgot what I said earlier. Please tell them that you need to speak to a tax technician regarding double-taxation between UK and Japan, residency, foreign redundancy payment from Japan you are receiving in Sept this year and foreign savings income. You might not get to talk to a tax technician or a Tax Inspector straight away. They may have to call you back within 3-7 days depending on how busy they are. I expect at least a few telephone calls back and forth between you and HMRC. Summer is the worst time due to annual holidays, etc!. Try not to miss the first callback if applicable, or you have to repeat the same process! If they do not call you back despite one was promised. Call them to get more prompt response.

Any mentioned procedure may no longer be the case. HMRC do change theirs very often.

Do excuse me if you already know what I am telling you.

IMPORTANT

Do not write to HMRC regarding your situation to start with, or you wait many weeks maybe in order to be told they need more paperwork from you. Write if you are advised to by a tax technician or you have failed security, unless you think you may pass on the next call.

I know for a fact that first £32K of redundancy received in the UK is tax-free unless there was a recent change. The excess is then taxed at your highest rate of tax. Although your situation is different, this may be useful to know.

You are certainly going to be asked to fill a P86/Arrival in the UK form when you go back. You can download this. Wait until you talk to HMRC before you send it in. Sending to the right address is VERY important. Also, if you have never been self-assessed / done a tax return before. It is 95% likely that you are going to, simply because of your foreign redundancy and foreign savings income. It you need to do a tax return ( I am only talking about the current tax year), the earliest you can file is 6/4/13. You may need to employ a good accountant with relevant knowledge to help with ONLY this tax return (and maybe the next one, too). If your tax affairs are going to be simple or much simpler afterwards ie you are only going to work in the UK, you can do your own tax return. Generally, IMHO, 80% of people can do their own tax returns if only they read the questions and notes properly. The notes are VERY useful!

If you are required to do a return, make sure you do each return promptly as refunds, if applicable, will come back to you sooner whilst the amounts due to pay, if applicable, still have the same deadlines. Also if one day you no longer need to file a return having no SA criteria, leaving each return too late, HMRC might not cancel the following tax return.

If your foreign savings income is more than £250 ( please double check this with a tax technician, I only was told by one last year but I cannot say that it is £250 for sure), you will possibly have to continue filing tax returns. There are tons of SA criterias and anyone can have one due to changes in circumstance. You can be asked to start doing one at anytime. Also, unusually, you may be asked to submit multiple-year tax returns. In short, if your UK tax record is full of blanks, then HMRC will want more info until it looks complete to them before they will do anything else.

I personally like to keep doing SA tax returns because it is self-assessed and needs up-to-the-minute info that only I know. I might as well re-concile my tax each year to get refunds or to avoid big surprise such as multiple-year underpayments of tax which can cause much more headaches than doing a return a year. But most people feel like crying or screaming abuse as soon as they are aware that they will be self-assessed.

Make sure if you are going to work in the UK again, you need your employer to do a P46 for you. But if you are going to do free-lance work, ring Self Employed Helpline ASAP as you need to register. But don't register as self-employed because your contractor/ payer told you, too. Your employment/self-employment status needs to be confirmed when registering anyway.

Hope there is some tiny bit that helps you. Good luck! :cool:

Hi

I am a British citizen and have been living overseas since 2005. I will be returning to the UK on 1st August 2012 after being made redundant on 31st July.

My severance payment will be made in September.

Can I confirm that, even though I will have regained UK residency from 1st August, the severance payment which will be taxed in Japan will not be subject to UK tax (even though physical payment is made after I become a UK resident)?

Also, I have interest income from UK and offshore accounts. Am I correct to assume per the split year concession, that that tax will only be applied on an accrued basis from 1st August?

Many thanks,
JS

Hi

I am a British citizen and have been living overseas since 2005. I will be returning to the UK on 1st August 2012 after being made redundant on 31st July.

My severance payment will be made in September.

Can I confirm that, even though I will have regained UK residency from 1st August, the severance payment which will be taxed in Japan will not be subject to UK tax (even though physical payment is made after I become a UK resident)?

Also, I have interest income from UK and offshore accounts. Am I correct to assume per the split year concession, that that tax will only be applied on an accrued basis from 1st August?

Many thanks,
JS
 

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It is 95% likely that you are going to, simply because of your foreign redundancy and foreign savings income. It you need to do a tax return ( I am only talking about the current tax year), the earliest you can file is 6/4/13.
Yes, 2012/2013 tax returns will be issued by HMRC on or after 06 April 2013 and the deadline to file this online is 31 January 2014.
 

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Generally, for UK tax purposes, a non contractual termination payment will be taxable in the year of receipt. As noted above there is an exemption for amounts of up to £30,000.

Amounts over this would ordinarily be taxable. However, where the termination payment relates wholly or partly to non UK service then the UK legislation provides either a complete or partial exemption.

Broadly complete exemption will apply where the foreign services represents at least three-quarters of the whole period of service (up to the date if termination). There are other less strict criteria where the employment exceeds 10 or 20 years.

Partial exemption, broadly, provides a pro rata exemption based on UK and overseas service (i.e. if you don’t qualify for complete exemption you will probably qualify for partial).

In summary, if the non-contractual termination payment relates wholly to a non UK employment where no duties were performed in the UK its should be outside the scope of UK tax, if in part it relates to UK duties then it should be either fully exempt or partially exempt as above.
 

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Agreed with Abo above and I think it's quite acceptable to argue with HMRC that under the UK Japan DTT only Japan has jurisdiction on the severance payment.
As regards split year by concession on bank interest, yes that treatment should be available. However normal tax planning for returning ex-pats includes closing such accounts to ensure all interest is paid - also there are reasons to trigger any gains before returning, and sometimes some changes to make in the ownership of the UK property, if any.
 
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