What's up with the UK tax situation

[gipilot]

What's up guys,

I am starting at Cx in august. A few months ago I heard several rumours about a troubling tax law to be implemented in the UK that will effect UK based pilots pay.

I was wondering if this law was intoduced or whatever happened. I am actually planning on commuting now but would still want to know what's up with that.

Thanks in advance.

[sisyphos]

It will arrive in six months time. Don't want to destroy your dreams, but commuting won't help: the tax will be deducted upfront from your salary. I don't know what you are earning at the moment, but be prepared for a lousy salary at cx with paye in force...

[Turn and Burn]

gipilot; you don't give enough information. If you do not live in the UK you will get a 'no-tax' code, which means that tax will not be deducted at source. For this to apply you must spend no more than 90 days in the UK.
If CX establish a company in the UK, then you may be liable for National Insurance, which, on an FOs salary, would be around GBP350 per month. If you are a Finnish national, you may be exempt from the latter.
There are lots of good reasons not to start a company in the UK and it baffles me that CX are even thinking about it. There are other less expensive options for overseas companies.

[gipilot]

Well, I am not planning to live in the UK. I would just like to commute to work. The thing is I heard all about this tax situation which I peronally find absurd especially considerig the fact that I am already paying tax in HKG.

But I keep hearing several things, like Cx and Ka are working on a exemption or also about this 90 day rule etc. etc. So I just want to be clear on all of that.

I can imagine though that for the guys living in England it might be a major issue. this new law is a killer.

[sizematters]

actually there are both emloyer and employee National Insurance contributions plus PAYE tax will be deducted at source for all UK based Employee's and then you will have to sort out on an individual basis your tax situation/ Liability......................

Obviously you will be able to offset any Hong Kong tax from your UK liability and if you are not actually Resident in UK you will ba able to get a "Nil Tax" code. however, the onus is now on the individual to prove his resident staus and then reclaim any tax paid, whereas before the UK tax man used to have to chase after people....................

Nasty business.................................

[sisyphos]

guys,

aren't you a little bit too optimistic here ? Like, you just go to the tax man and tell him " well, I do not live here, please give me back my money.." Yeah, right...:hmm:

fact is, this will mess up the salary for every based crew in europe big time. there is no way you get out of this without proving them that you pay tax in you place of residence instead. Well, do the math..

Joe le Taxi: there is no way anyone on a base in europe could afford british tax, your pay check would be below say, a waitress.

[gipilot]

Thanks for the input guys.

The thing my country has tax-agreements with HKG and so if I would to stay more than 183 days outside of my homecountry for work purposes I won't have any problems at all.

Ok that's life and I have to live with it. But what I do find strage is this whole tax thing, because I will NEVER register myself in the UK. I just want to fly there, pick up the airplane and leave, maybe the same day or maybe the next day, THAT's IT. How can they still be making a big deal out of me paying any taxes in the UK, it's just a base, I come and go.

But what I still wonder is what the UK resident Cx pilots think about this. Doesn't the tax man have ANY mercy????? And what do you guys expect Cx will do about this Tax situation??

[ixion17]

They're not just taxing you, they are taxing the company for employing you in the UK. You are just getting caught in the cross fire. The UK tax people are coming after CX for national insurance (a UK stealth tax of about 20% gross income) which it gets from both the company and the employee. It also means it gets its hands on your tax first and then you have to get it back off them. To do this you have to prove you have the right to work in UK, you are genuinely non-resident, and of course you will always be liable for some tax for work duties carried out in UK. If it doesn't believe you or thinks you are fibbing then you may get 'investigated'.
Bottom line - be prepared to fork out extra cash for professional advice on dealing with (for you) 3 hungry tax agencies!

[DJS]

Clearly it is becoming more evident within the wider community that the UK Revenue (HMRC) are actively seeking to tighten their approach and grip extending taxing arms as far as possible in many respects but also in relation to aircrew.

The whole matter has been rumbling on for a long time but looks as though it may now overflow and probably result in further shake ups.

Some may encounter problems which could include greater risk of a retrospective challenge regarding any claimed Non Residence status and UK tax position, particularly in respect of any periods during which a UK basing has been or will be held. Subject of course to overall individual facts of each case.

HMRC guidance within IR20 is long over due a complete re write and simply cannot be relied upon.

UK Tax Residence status is covered by very little UK legislation with additional guidance, practice, and concessions being drawn from case law.

Tax cases of Robson v Dixon 1972, Shepherd 2005 and more recently Gaines-Cooper 2006 refer.

When trying to stay a step ahead, various considerations (list below not exhaustive or necessarily in any particular order of importance) will impact upon the outcome and they include:-

1) your physical presence (i.e. visits to UK)
2) performance of UK substantial duties ( i.e. working flights) or not
3) UK accommodation maintained available for use or not
4) Basing UK or overseas throughout relevant period
5) Location of home and family
6) Host country tax position (returns filed/tax resident/tax paid)
7) Application of relevant Double Taxation Agreement (Tax credit/exemption)
8) Standing and use of overseas property (family home / holiday home) etc.


Some have already encountered individual enquiries from the UK taxman into self assessment tax returns previously submitted and this trend is only likely to escalate.
Of course this can prove to be both time consuming and costly to both sides.

Perhaps any blanket company negotiations with HMRC will seek in the first instance to result in the same general outcome for the majority of individuals on say a UK basing with PAYE income tax at source, but I envisage that each case will surely remain open to individual review and assessment (i.e. switch to UK tax up front and possible Non Resident claims and sc690 codes or No Tax codes and annual SA tax return/Refund).


Much rumour will no doubt continue to abound and perhaps it’s a question of watch this space and others, awaiting further developments whilst contemplating just how many hoops you may still wish to try and jump through. Providing they tell you in advance of course and that has been another great historical problem within this developing area of UK taxation.

Will you still be able to continue to live abroad effectively within your chosen host country and have this upheld by the UK tax authorities when on a UK basing?

Probably yes, providing that all other relevant criteria are adhered to and indeed upheld, then it should still be possible to take a view that a UK Non Residence status could continue for some with restricted UK liability arising to the extent of remuneration attaching to UK duties performed and other UK arising income.

The more important questions may be do you still want to live abroad and will any combined foreign taxation turn out to be more onerous than any UK liability?

UK tax authorities will continue to have regard to your individual circumstances and lifestyle choice but you may find yourself, as others have indicated, filing tax returns to three or more jurisdictions -with all of the attendant admin and fees.

So do seek further professional advice within each relevant jurisdiction, being that of your home country, basing and employer’s location.

Turbulence ahead possibly so, but hopefully with careful planning - not for everyone.

David

[sisyphos]

Gipilot:

Do not get confused here: a double tax agreement with your country and hong kong is irrelevant, you will be employed by a BRITISH company, that is what the fuss is all about. this british company deducts british tax upfront from your salary , plus NHS and god knows what more.
The reason why they offered you only a manchester base is exactly because of that, eveybody who could fled to other bases, these are now full with a huge waiting line ( problem is these bases are next up for a similar change). I am not telling you not to accept the job, that is your personal decision, but you might want to check with a tax lawyer in your country asap, you WILL end up with much less money than you expect.

[bbbw]

gipilot: simple solution, tell CX you'll only accpet a -400F slot on a mainland Europe base.

[Geepers Eprs]

Leave it alone boys THIS IS NOT THE PLACE FOR THIS...

[DJS]

Anyone wishing to comment?

[Geepers Eprs]

Yes...THIS IS NOT THE PLACE FOR THIS!

[Kitsune]

How else will wannabees know what they could be letting themselves in for.....?:uhoh::uhoh::uhoh::uhoh::uhoh:

[BigLebowsky]

Geepers, What's not the place for this?
DJS, thanks for your insights into this subject (even though half of it went straight over my head :O), you seem to be someone that have experience or atleast more than average knowledge in the area. This whole issue is the only thing that's holding me back. I'm not a brittish citizen, but I am a resident, so it's going to be an interesting winter. I'm curious to see what will happen on the political arena, but also what the companies will do to keep the employees happy, if anything...

[Apple Tree Yard]

uh...Geepers Eprs.....actually...this is EXACTLY the place for this. Sounds to me like you are a wee bit nervous on the subject....?:ooh:

[Numero Crunchero]

I can't comment on how the mechanics of it all will work but I can comment on the generalities.

UK basing company will start early April 08. Anyone working for that company will therefore be liable for NHI and normal UK income taxes. Residency or not is beyond my knowledge so for that you will need professional advice. Double taxation agreements prevent 'double taxation' ie you will pay the total tax of the higher taxing jurisdiction (UK presumably). But that does NOT mean in the short term you may be double taxed and have to claim the over taxation back from either authority.

CX were trying to get HMRC to accept a lower rate of tax due to 16% tax in HKG. I don't know if they have been successful or not.

So, worst case, you will be taxed normal tax in UK plus 16% in HKG. When you eventually show your tax receipt for HKG the HMRC should refund you the 16% you paid in HKG.

Clear as HKG water?

[jacobus]

Actually folks,this is not the place for this....DJS is, I suspect, an employee of a well known financial advice firm,situated not a million miles away from the Sussex coast, and not a pilot at all and was, just possibly,trying to drum up some trade...hence the level of knowledge displayed...

[DJS]

Interesting comments and I am not a pilot.
My profile clearly states this and of course it is available like any other to read or not as individuals wish.
So no axe to grind or preconception as I am simply interested in keeping up to date with Aircrew opinion and watching all developments in the field of Aircrew tax matters.
Often best expressed or confirmed directly by Aircrew themselves.
So with an open mind and wishing you all the very best.
DJS

[BigLebowsky]

Yeah, so what? So DJS is giving free advice/getting som businesss. What do I care, I've got my own financial advisors etc, but if DJS wants go give us free advice what's the problem?
But then again, there's always the cind that see problems in anything, rather than the soltion...