Work for a uk company but will be 190 PR - tax issues?

[Lucy Jane Victoria Hose]

Hi,

 

Apologies if this has been asked before, not seen many threads on this topic.

 

I’ve told my work I’m leaving. They are a uk based company and have offered to see if they could keep me on their PAYE for 3 days a week when I move. This would be amazing, but is it even possible for a uk company with no ties overseas to keep me on? They would pay into my UK bank account. They’d be paying in £s like they do now (I guess?!?). I know I won’t get taxed twice if I fill out the correct forms, but I’m just not sure if I can stay on uk PAYE if I’m a perm resident of Aus?

 

Is it easier if I set up as my own (freelance) business in Aus? Would they need to pay me in dollars or could I invoice them in £s, they pay into my uk bank and I transfer every so often to my oz bank? I’ve already got an oz bank account and money exchange account set up.

 

Sorry for being thick!

 

Lucy

 

 

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[Guest]

I think you can be set up as self employed in Aus and invoice them. Invoice in £ and have it paid into a UK account and then transfer it over using a forex would be the most straightforward way to go about it I'd think. Of course the rate will vary a little each time but you can transfer when the rate is looking good that week say. Also you'd probably need to set a contractors rate which may be different than what you are on  now? 

Afaik this is doable. Hopefully someone else can confirm.

 

[Collie]

Hi LJV,

So, if I understand you correctly, you will be moving to and living in Australia and working remotely for your UK company (online, phone etc), paid as a PAYE worker (tax deducted and paid to HMRS).

I'm not 100% sure but in principle I would think that it should be ok as long as you declare the income (& tax deducted) on your Australian tax returns.  You would bear the f/x risk of course if you needed to bring your net salary over  Worth having a chat with a tax expert (if it is a large company - there may be somebody inhouse, if not the company may be willing to pay for a consultation with a tax expert).

The high level principles are as follows:

• Australian tax residents are taxed on their world wide income (where and what currency they are paid in is irrelevant)
• Australian tax residents complete a tax return each tax year (July to June)
• There is a section on your tax return for foreign earnings and tax deducted (ATO will provide f/x rate to use - I still have a small Euro income that I declare every year)
• You will not be charged tax twice on the same income as the UK and Australia have a double taxation treatment
• You will pay tax at your marginal rate in Australia and receive a credit for tax paid in the UK.  If the UK marginal rate is higher than Australia you should get a refund (as the deductions in the UK will be higher than your liability), if it's lower, you may have a tax bill (shortfall of deductions)

Worth doing IMO, at least in the short term until you get sorted in Australia.

I had a friend in Sydney who did something similar, both he & & his wife were still working for their employer in the UK while working in Sydney.  I think they agreed their salary in AUD before they left though (ie the company is bearing the f/x risk which is a problem when the GBP tanked).

Again, worth checking out with an expert (oe even the ATO) as there may be payroll tax liabilities etc on the employer.  An expert may recommend that you set up as self employed and invoice your company.

Hope this helps.

 

 

 

 

[Lucy Jane Victoria Hose]

Thanks both. As always this forum comes to my rescue and makes perfect sense [emoji106]


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[Lucy Jane Victoria Hose]

Hi LJV,
So, if I understand you correctly, you will be moving to and living in Australia and working remotely for your UK company (online, phone etc), paid as a PAYE worker (tax deducted and paid to HMRS).
I'm not 100% sure but in principle I would think that it should be ok as long as you declare the income (& tax deducted) on your Australian tax returns.  You would bear the f/x risk of course if you needed to bring your net salary over  Worth having a chat with a tax expert (if it is a large company - there may be somebody inhouse, if not the company may be willing to pay for a consultation with a tax expert).
The high level principles are as follows:

• Australian tax residents are taxed on their world wide income (where and what currency they are paid in is irrelevant)
• Australian tax residents complete a tax return each tax year (July to June)
• There is a section on your tax return for foreign earnings and tax deducted (ATO will provide f/x rate to use - I still have a small Euro income that I declare every year)
• You will not be charged tax twice on the same income as the UK and Australia have a double taxation treatment
• You will pay tax at your marginal rate in Australia and receive a credit for tax paid in the UK.  If the UK marginal rate is higher than Australia you should get a refund (as the deductions in the UK will be higher than your liability), if it's lower, you may have a tax bill (shortfall of deductions)

Worth doing IMO, at least in the short term until you get sorted in Australia.
I had a friend in Sydney who did something similar, both he & & his wife were still working for their employer in the UK while working in Sydney.  I think they agreed their salary in AUD before they left though (ie the company is bearing the f/x risk which is a problem when the GBP tanked).
Again, worth checking out with an expert (oe even the ATO) as there may be payroll tax liabilities etc on the employer.  An expert may recommend that you set up as self employed and invoice your company.
Hope this helps.
 
 
 
 

Fabulous. I would love to stay PAYE but thought setting up on my own might be easier (for them). Should I set up in the UK as my own business or in Aus? Guess it doesn’t matter just as long as I have a UK bank account they can pay into? Ty [emoji4]



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[Guest]

If you are resident in Aus I'd say set up there for tax purposes etc and go about it all from the country you are living in. 

[Ken]

In theory your UK employer should register with the Australian Tax Office as a withholder and deduct Australian Tax (and pay Super on top of your salary). In practice that's not going to happen - they'll realise the red tape is too difficult and decide not to keep you on.

Another option is for you to be self-employed in Australia. You will need to obtain an ABN (Australian Business Number) which you can't get until after you've moved as you'll need your TFN (Tax File Number) first and those are only sent to Australian addresses. You would treat the UK earnings as Australian income just as any exporting business would (it is Australian income because that is where the work is done).

A third option is to remain on the UK payroll (once you've submitted your P85 when you leave the UK then HMRC will issue a new tax code where no tax is deducted while you remain abroad) and simply report the amount earned on your Australian Tax Return as foreign income. That's not strictly the right way to do it (as I said in the previous paragraph it should really be Australian income) but provided you're not doing it to avoid tax it won't be a big deal to the tax man - but because Foreign income is regarded as passive income rather than earned income it might cause you issues down the track (with obtaining mortgages for example - not that obtaining a mortgage is easy if you're self-employed).

[Alan Collett]

Yes, as Ken says the UK employer should establish a local payroll in Australia, and account for compulsory super contributions (9.5% of your gross pay).

I'd understand if they prefer not to do this - many don't, and there is an inherent bias on your oart not to rock the boat, and on the employer's part not to take on an additional compliance obligation.

Feel able to ping a private message to me if you'd like to explore more fully.

Best regards.