Sole Trader outside UK full time but not resident elsewhere taxes?

[Tyrhone]

Hi all, my first post here after bouncing around the internet looking for answers for sometime, unfortunately I haven't found one yet! Hoping someone on here might have some insights.

I am a UK citizen but was not resident here for about a decade after living in Aus, but returned to UK as a resident 2 years ago and so had to setup as a sole trader for my web design business. I am now planning to hit the road again full time, but will not become resident anywhere else, might come back for a few weeks in a year so not over the 30 day max mentioned by HMRC.

I only earn around £15k - £18k a year, and about £9k - £11k of that from a client in the US. I have no property and will be using my mums address for any correspondence, my mum being the only family I have over here.

Question being, am I still liable for tax in the UK? Perhaps only for what is earned from UK companies (which would be less than the tax free threshold)? My taxes are pretty simple as a sole trader so I do them myself online, but after just having paid "payment on account" for the first time I am now wondering if that should be my last tax payment.

Any advice anyone could give would be greatly appreciated, or even a point in the right direction of someone I can ask this question of, be that a sort of "one off" accountant I can pay to answer a few questions like that.

Thanks!
Tyrhone

 

[Scalloway]

UK residence

The statutory residence test | Low Incomes Tax Reform Group

The statutory residence test (SRT) determines whether you are resident in the UK under UK domestic tax law for tax years 2013/14 onwards.

www.litrg.org.uk

 

[Tyrhone]

UK residence

Thanks mate, I have seen that before and to be fair it does spell out that I would likely be non-resident under the "less than 16 days in a tax year" non-resident clause. Any idea how income derived from the UK might need to be treated though?

 

[Scalloway]

Tax on your UK income if you live abroad

Tax on your UK income if you live abroad

Find out whether you need to pay tax on your UK income while you're living abroad - non-resident landlord scheme, tax returns, claiming relief if you’re taxed twice, personal allowance of tax-free income, form R43

www.gov.uk

You will also need to consider the tax laws where you actually reside.

 

[Tyrhone]

Tax on your UK income if you live abroad

You will also need to consider the tax laws where you actually reside.

Thanks again! I will not be living anywhere more than 3 months so won't be resident anywhere else. It looks (from the link you sent) like I will have to do my taxes by post for UK derived income, even though they will almost certainly come in under the tax free threshold.

Another question if I may, I am leaving the UK in a couple days and will not be back for more than a couple weeks in a year (for the foreseeable future), making me non-resident for tax purposes, but when does that come into effect? So for example; will I be non-resident for tax purposes from when I leave with the intention of being out, or does that designation only begin once I have been out of the country for a full year already? This makes a difference as if it is the former my tax situation changes for the tax year April 2023-2024, but if the latter it is only relevant for April 2024-2025.

 

[UK Contractor Accountant]

Tax if you leave the UK to live abroad

What to do if you go to work or retire abroad - sending HMRC a P85 or tax return, paying National Insurance and claiming benefits, visiting the UK after you've left

www.gov.uk

 

[Tyrhone]

Thanks mate, I have had a read through that (before and again), there are parts I can figure out, and some which stump me, or at least befuddle me, and I don't want to get on the wrong side of HMRC. I think I would qualify for split year, I am leaving tomorrow and won't be back for more than 16 days in the next tax year, but I will be earning some income (around £7k maybe) from UK sources.

If I guess it right, this means I can declare myself non-resident using P85 from 7 Jan, and will be eligible for split-year on the part of my earnings which come from other countries. This should also mean my payments on account will cover the 2022-2023 taxes with a refund due from HMRC. That is how I see it, accomplishing that, or if that is entirely correct is another story. Any advice on how, or a tax person who could help me sort that out would be great. I called around a few places, gave my story and was told sorry we can't help you.

Thanks again for any insights and links.

 

[Ashbridge]

Different countries have different rules about residence and liability for tax on income arising in different countries. So not only do you have to consider your residence and liabilities in the UK, you will also have to consider where else you may be deemed to be residence. For example if you stay for 12 nights in the country of Fictionaland they may deem to you to be resident there.

It will undoubtedly be more expensive but I would go with one of the larger firms like PWC, Deloittes etc. as they will have offices and therefore probably experts in the tax regime of Fictionaland as well as the UK and all of the other countries you are visiting.

 

[ctrlbrk]

It will undoubtedly be more expensive but I would go with one of the larger firms like PWC, Deloittes etc. as they will have offices and therefore probably experts in the tax regime of Fictionaland as well as the UK and all of the other countries you are visiting.

Yeah but that largely depends on turnover and profit.

These firms charge an arm and a leg. I don't think OP's earnings would justify it.

 

[Tyrhone]

Yeah but that largely depends on turnover and profit.

These firms charge an arm and a leg. I don't think OP's earnings would justify it.

I am pretty small fry, keep a small client base and only turn over around £16k - £18k a year, intentionally so I can keep a good work/travel balance.

With regards to working and being resident for tax purposes on short stays in other countries (1-3 months max), I don't actually work for anyone in those countries (my work coming mainly from the USA and secondarily from the UK), so I wouldn't expect I would be considered resident for tax purposes in that situation, but admittedly I cannot say that with any certainty.

With an accountant I am really looking for advice on my rights and legal requirements moving forward, and if not too costly perhaps some help with the right documents, those big pricey firms are very likely beyond my needs and wallet!

 

[Ashbridge]

Yeah but that largely depends on turnover and profit.

These firms charge an arm and a leg. I don't think OP's earnings would justify it.

Fair point.