PPRuNe Forums - View Single Post - EK: is the potential tax liability too great for US pilots?
Old 2nd Apr 2014, 09:43
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BYMONEK
 
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TheDarkHorse and jack schidt

Couple of points and apologies for slight thread drift as UK not USA.

Firstly, if you earn any income from any source in the UK then it is most likely a requirement to file an annual tax return. If the tax office have actually told you not to bother then I'd ensure you have a copy of that correspondence and keep it somewhere safe. If it's an accountant, get advice from someone who specializes in overseas matters. Regardless of wether you're classed as resident or not, income generated within the UK must be declared, even if it's below the personal threshold. You will pay 25% tax on income generated over your allowance.

Secondly, if you do fall into the category above, say your income on property rentals exceeds the personal tax free allowance, then a proportion of your salary earned in EK also will be taxed against time spent in the UK during work. In the scenario above, you could spend 89 days a year on holiday without further tax liability. However, your once a month Manchester or Birmingham trip will incur a charge. It uses a formula of salary, total hours/trips and time spent in UK. Each UK trip is worth 2days. If you don't earn above the personal tax threshold, the tax on partial salary does not apply. Tax on income will only be charged if the personal allowance is exceeded!

All of the above as well as far more complicated definitions of UK domiciled, resident have been brought in to generate income from those dodging the system. It also stops the BA 'Nigels' of this World not paying tax on their super B747-400 pay while they sun it in Nice and St.Tropez.

For the vast majority of EK pilots this will not be an issue but cover all bases and if it means getting sound financial advice, do so. What pennies you may be saving now could cost you dear if the tax man comes knocking and your house is not in order.....even if it is in Meydan!
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