View Full Version : Tax free earnings abroad
heights good
21st Mar 2018, 22:32
Chatting tonight with an old friend who works/lives abroad regarding tax-free earnings, which he qualifies for.
Why do military personnel not qualify on overseas postings?
Because they would then have to comply with the host nation taxation and social security systems.
Better the devil you know if you are only going to be there for a few years.
heights good
21st Mar 2018, 22:52
So can I infer that it is possible and legal, just a lot of hassle?
Looking at the US as an example I would have a tax rate of 25% maximum (average would be 17%) vs the UK rate of 25% +40% on a large chunk of additional earnings? I would assume there is no requirement for social security payments?
This doesnt seem a bad deal at all
https://www.google.co.uk/amp/s/www.bankrate.com/finance/taxes/tax-brackets.aspx/amp/
Military personnel who are stationed abroad are subject to an inter governmental agreement called a Status of Forces Agreement which regulates all sorts of things concerning having armed people in the country. If it were not for the SOFA they could be regarded as being in possession of illegal weapons etc.
The admin, tax and discipline side of things are also covered, all in all you are better off with the advantages of the SOFA than you would be without it. Not that the soldier/sailor/airman has any choice in the matter.
superplum
22nd Mar 2018, 08:59
Chatting tonight with an old friend who works/lives abroad regarding tax-free earnings, which he qualifies for.
Why do military personnel not qualify on overseas postings?
Been there, tried that, and got the NO! Many years (3 decades) ago I tried it on a tax return (from Germany) and got a very nice letter from the then Income Tax man explaining that, as a member of HM Armed Forces, I was deemed to be employed in the UK regardless of where I was working and length of time abroad.
:cool:.
Fareastdriver
22nd Mar 2018, 09:56
I would assume there is no requirement for social security payments?
You wait until they send you the health insurance estimates.
Pontius Navigator
22nd Mar 2018, 12:04
HG, your basic tax rate is 20%.
In addition to your 'tax free' status you would probably lose a lot of allowances and benefits such as LOA as you be a resident. Accommodation charged at local rates.
Don't worry, the beannies aren't stupid.
pasta
22nd Mar 2018, 12:20
If you're not paying National Insurance, your UK state pension could be impacted too.
Training Risky
22nd Mar 2018, 13:37
Do the UK Merchant Navy (RFA) still get tax-free earnings? Even when not on active ops?
Saintsman
22nd Mar 2018, 15:05
Things may have changed since I was in, but when abroad we would be entitled to a number of tax free advantages - cars & booze to name a couple.
Fareastdriver
22nd Mar 2018, 18:25
Plus the fact that you don't have to wear sunglasses all the time you are in the UK.
heights good
22nd Mar 2018, 19:38
HG, your basic tax rate is 20%.
In addition to your 'tax free' status you would probably lose a lot of allowances and benefits such as LOA as you be a resident. Accommodation charged at local rates.
Don't worry, the beannies aren't stupid.
Those are all location based and not tax status based. I dont see how these could be touched or affected.
Pontius Navigator
22nd Mar 2018, 21:17
Those are all location based and not tax status based. I dont see how these could be touched or affected.
Pure speculation and conjecture. If you want the benefit of nonresidential status then it is a fair assumption that you are not 'overseas from UK' but resident there.
A valid comparison might be Loan Service Ts and Cs where you are paid and taxed (or not) by the State to which you are loaned.
Heathrow Harry
23rd Mar 2018, 08:17
As said above if you are overseas on military service you are protected from local tax AND local laws to some extent
If you were on attachment in Saudi Arabia the tax situation would be attractive but the local laws...................... visa, resident permit, driving licence are requiered everwyehere - and when it comes to alcohol, reading material, mixing with other sexes etc etc you are in a minefield - and you are on your own
Unfortunately the UK hasn't a major military presence in either Monte Carlo or the Brit, Virgin Islands - everywhere else that is low tax is a risky spot for anyone on their own without massive support/protection (and I'd include the USA )
Back in the 1980s the on-site contractors based at sites like Mount Alice were there for extended periods and were paid tax free.
Mind you, they drank the equivalent over the bar in whisky every night. Got the DTs if we ran out - they actually laid on a medical chopper flight to bring in a resupply on one occasion.
JEMster
23rd Mar 2018, 09:12
There is specific UK legislation which says that all UK Crown Servants working abroad must be taxed as UK taxpayers so long as they are undertaking UK Govt work. Crown servants includes civil servants, diplomats and military.
heights good
23rd Mar 2018, 09:29
There is specific UK legislation which says that all UK Crown Servants working abroad must be taxed as UK taxpayers so long as they are undertaking UK Govt work. Crown servants includes civil servants, diplomats and military.
Of course there is, can’t have anyone being advantaged by service to the crown 🙄
Unless of course you a civil servant working in Brussels......
Then they are a civil servant working for a co-ordinated organisation, a completely different kettle of fish.
Not undertaking work on behalf of the UK Government then?
That explains a lot.......
Members of the national delegations are national civil servants and subject to their home countries tax laws etc., the people who make the machinery of the co-ordinated organization work are international civil servants and are administered in accordance with various treaties.
Training Risky
23rd Mar 2018, 15:21
Where do I buy tickets for the 'international civil service' gravy train!? Toot toot...
Well, the EU gravy train is about to hit the buffers as far as Brits are concerned...
You have to be a national of a member state of the organisation.
Here's a list of ticket offices for the gravy train:
List of Co-ordinated Organisations
There are currently six members of the Co-ordinated Organisations. On 31 March 2010, the Western European Union was dissolved by the ten member countries and its competences were transferred to the European Union. EUMETSAT joined Co-ordination on 1 July 2012.
The Council of Europe (CoE)
The European Centre for Medium-Range Weather Forecasts (ECMWF)
The European Space Agency (ESA)
The European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT)
The North Atlantic Treaty Organisation (NATO)
The Organisation for Economic Co-operation and Development (OECD)
FJ2ME
24th Mar 2018, 06:14
Pure speculation and conjecture. If you want the benefit of nonresidential status then it is a fair assumption that you are not 'overseas from UK' but resident there.
A valid comparison might be Loan Service Ts and Cs where you are paid and taxed (or not) by the State to which you are loaned.
The above assertion about Loan Service terms is incorrect. Loan service is paid for by the host nation directly to UK government. UK governemt then pays the individual in his normal JPA pay statement, usually adding Loan Service Pay and LOA. As LOA is an allowance it is not taxed, but all other income is, so loan service pay is taxed at the marginal rate-for most loanees 40%. The total take home is usually roughly equivalent to a normal at home salary without the tax. Incidentally the HN premiums paid to receive a loanee are about 3-4 times the amount that is paid to the individual and are independently negotiated to LOA rates, which seem to be cut year on year. So "in order to simplify the servicemans tax and National Insurance affairs, the serviceman is paid and taxed as if he was in the U.K. Throughout his service, irrespective of where he serves" so basically you pay about £2000 a month income tax and NI to avoid missing years towards your state pension... Many of the states we loan to have no local income tax so none would be due if taxes at local rates. A servicemans spouse accompanying him on loan may be considered resident abroad for tax purposes as indeed may the servicemen for income received outside the service, but his service income will always be taxed. Simple eh? And no it doesn't make sense or stand up to scrutiny but that is the situation. And not everyone serving overseas has access to tax-free car sales and the like, that depends on individual country MOUs. An American serving in exchange in the UK will be taxed while at home base but not whilst abroad on operations, and he will qualify for an official passport and tax free purchases. A UK serviceman serving in the US will not and will be taxed throughout by PAYE.
Now secondment (the devil is in the detail here) is different again...