# Tax questions



## Clemmie00 (Jun 10, 2012)

Hi everyone,

I've been in Spain since last September and my contract runs until late June. I plan to cancel residencia, the padron and fly out shortly after that to return to the UK. I understand that being resident 183 days in a tax year makes you tax resident in Spain. Unless I've misunderstood, I won't be resident for 183 days this year, so do not need to worry about declaring worldwide earnings etc to the Spanish tax man? 

I ask this because I plan to register as self-employed in the UK and start doing some freelance writing. It'd be best to get started now, while I have quite a bit of spare time (I only work in the evenings). Will I be able to do this, legally, while residing in Spain and paying PAYE Spanish tax on my day job salary? HMRC say you have 6 months to register your new business, so by the time I register and pay any tax, I'll be resident and, presumably, tax resident in the UK again. 

Any advice appreciated!


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## brocher (Mar 21, 2011)

Clemmie00 said:


> Hi everyone,
> 
> I've been in Spain since last September and my contract runs until late June. I plan to cancel residencia, the padron and fly out shortly after that to return to the UK. I understand that being resident 183 days in a tax year makes you tax resident in Spain. Unless I've misunderstood, I won't be resident for 183 days this year, so do not need to worry about declaring worldwide earnings etc to the Spanish tax man?
> 
> ...



Did you advise HMRC of your temporary departure? You can check their website - HM Revenue & Customs: Income Tax when leaving the UK

Assumiing you did this correctly, they will probably already have told you that, as you were resident in the UK for part of the tax year April 2012 - 2013, you are liable for UK tax for the whole of that year and you will have been issued with a UTR number and will be required to complete a self assessment in retrospect. On this you will have to declare your Spanish income and be taxed , in the UK, accordingly. This does not mean you will be taxed twice for the period you are in Spain, as Spain and the UK operate a reciprocal agreement. It just means if you have paid less tax than you should have you will have to pay the balance - if you have paid more, you will get a refund!

For the tax year April 2013 - 2014, you will have to declare the portion of your salary earned in Spain from April 2013 til June 2013.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> Did you advise HMRC of your temporary departure? You can check their website - HM Revenue & Customs: Income Tax when leaving the UK
> 
> Assumiing you did this correctly, they will probably already have told you that, as you were resident in the UK for part of the tax year April 2012 - 2013, you are liable for UK tax for the whole of that year and you will have been issued with a UTR number and will be required to complete a self assessment in retrospect. On this you will have to declare your Spanish income and be taxed , in the UK, accordingly. This does not mean you will be taxed twice for the period you are in Spain, as Spain and the UK operate a reciprocal agreement. It just means if you have paid less tax than you should have you will have to pay the balance - if you have paid more, you will get a refund!
> 
> For the tax year April 2013 - 2014, you will have to declare the portion of your salary earned in Spain from April 2013 til June 2013.


Nope, had no idea about that form until today. Is it too late to do it now? I don't really understand how tax works - I assumed that paying PAYE tax in the UK and then paying it in Spain was fine. I only earn about 670 euros/month here in Spain, so surely there's no way I can owe anything in the UK? 

If I understand correctly, then, I'm still resident in the UK for tax purposes and will be next tax year as well? So, assuming I can fill in these forms and do a self-assessment, I can register as self-employed and start working as a freelancer?


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## brocher (Mar 21, 2011)

Clemmie00 said:


> Nope, had no idea about that form until today. Is it too late to do it now? I don't really understand how tax works - I assumed that paying PAYE tax in the UK and then paying it in Spain was fine. I only earn about 670 euros/month here in Spain, so surely there's no way I can owe anything in the UK?
> 
> If I understand correctly, then, I'm still resident in the UK for tax purposes and will be next tax year as well? So, assuming I can fill in these forms and do a self-assessment, I can register as self-employed and start working as a freelancer?


Website says " if you are moving or have *recently moved*" - so I guess it would be a good idea if you got going with this now, then your affairs will be "in order" when you return to the UK.

No, you probably won't owe anything in the UK from your Spanish earnings as you have already paid tax in Spain. The point is, you still have to *declare* these earnings to HMRC - and you may well get a nice little rebate!

For the tax year Apr 12 - Apr 13, you probably won't be asked to fill in the self assessment until about Jan 14 (make sure you do it then or you will be fined), so it is best you sort this out now to save later problems - and make sure you keep all your proof of income, UK and Spanish, for the period so you have all the info you need when the time comes.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> Website says " if you are moving or have *recently moved*" - so I guess it would be a good idea if you got going with this now, then your affairs will be "in order" when you return to the UK.
> 
> No, you probably won't owe anything in the UK from your Spanish earnings as you have already paid tax in Spain. The point is, you still have to *declare* these earnings to HMRC - and you may well get a nice little rebate!
> 
> For the tax year Apr 12 - Apr 13, you probably won't be asked to fill in the self assessment until about Jan 14 (make sure you do it then or you will be fined), so it is best you sort this out now to save later problems - and make sure you keep all your proof of income, UK and Spanish, for the period so you have all the info you need when the time comes.


I will get on it. Don't even have a P45 from my previous employer so I suppose I'll have to request that asap.

I imagine I will get a rebate for this tax year, as I only worked April-September in the UK and they tax you assuming you're working the full tax year, don't they? 

Do you think it'll be OK to send this form off and then register as self-employed in the UK? They won't have an issue with my doing this while I'm 'resident' (legally resident, but not tax resident) in Spain?


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## brocher (Mar 21, 2011)

Clemmie00 said:


> I will get on it. Don't even have a P45 from my previous employer so I suppose I'll have to request that asap.
> 
> I imagine I will get a rebate for this tax year, as I only worked April-September in the UK and they tax you assuming you're working the full tax year, don't they?
> 
> Do you think it'll be OK to send this form off and then register as self-employed in the UK? They won't have an issue with my doing this while I'm 'resident' (legally resident, but not tax resident) in Spain?


I'd get this bit done first - and yes, you will need your P45 from your previous employer. You should always keep documents such as this for a long time - I believe, it's 6yrs for personal taxation, etc.

I'd take some specialist advice when you are back in the UK, as to what route you should follow in the future as you go self employed. There will be a lot more to consider than just your tax, i.e. - National Insurance, etc.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> I'd get this bit done first - and yes, you will need your P45 from your previous employer. You should always keep documents such as this for a long time - I believe, it's 6yrs for personal taxation, etc.
> 
> I'd take some specialist advice when you are back in the UK, as to what route you should follow in the future as you go self employed. There will be a lot more to consider than just your tax, i.e. - National Insurance, etc.


OK, thanks for the advice. 

Apparently registering as self-employed is quite straightforward in the UK, which is why I'm moving back. I intend to have a day job, paying PAYE and do the freelance on the side. It gets messy because I want to start working while I'm still living in Spain. Not sure just how messy, perhaps given that I'm still tax resident in the UK, it's not a big deal.


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## brocher (Mar 21, 2011)

Clemmie00 said:


> OK, thanks for the advice.
> 
> Apparently registering as self-employed is quite straightforward in the UK, which is why I'm moving back. I intend to have a day job, paying PAYE and do the freelance on the side. It gets messy because I want to start working while I'm still living in Spain. Not sure just how messy, perhaps given that I'm still tax resident in the UK, it's not a big deal.


What exactly is it that you plan to start doing now? You mentioned freelance writing?


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## Clemmie00 (Jun 10, 2012)

brocher said:


> What exactly is it that you plan to start doing now? You mentioned freelance writing?


Yes, freelance writing. I've been offered work for an online magazine, but can't start until I sort out the tax situation.

Another thing I'm confused about - the form you linked you asks about FULL TIME work abroad. I've checked other pages on the HMRC website and this seems to mean over 35 hours a week. I'm only doing 19 hours a week and that may be reduced to 15 soon. I don't see an option for that on the form. Would that affect anything?


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## brocher (Mar 21, 2011)

Clemmie00 said:


> Yes, freelance writing. I've been offered work for an online magazine, but can't start until I sort out the tax situation.
> 
> Another thing I'm confused about - the form you linked you asks about FULL TIME work abroad. I've checked other pages on the HMRC website and this seems to mean over 35 hours a week. I'm only doing 19 hours a week and that may be reduced to 15 soon. I don't see an option for that on the form. Would that affect anything?


There is a whole section on the HMRC website about working abroad, not just one form. However, if you are referring to form P85, I don't see any reference to working 35hrs. You just fill it in - its quite a simple form - and there's even a section which you complete if you will still have some UK income i.e. our online job and interest from savings, etc. 

Seems to me that would be your first step in sorting out your current affairs and it also covers your online job. You would just wait for HMRC's response. You will have kept HMRC fully informed about your Spanish income and your online job - sorted! Whatever they ask you to do, which would presumably be that you will fill in a self assessment in due course, you just do it. 

If you have any difficulty, employ an accountant - you should probably do this whatever, as they will ensure everything is done correctly. An accountant may even be able to tell you about some things you can claim back from your online work i.e. work expenses such as stationery, computer, heating and light which are necessary expenses for your self employed job.

All you have to do is ensure you keep every scrap of paperwork in order - including bills for things that could possibly be claimed back as expenses necessary to carry out your self employed job - and keep some money aside for when you have to pay tax on your self employed earnings. 

I'm just wondering if you have a student loan? HMRC will work out if your repayments are up to date on that, too.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> There is a whole section on the HMRC website about working abroad, not just one form. However, if you are referring to form P85, I don't see any reference to working 35hrs. You just fill it in - its quite a simple form - and there's even a section which you complete if you will still have some UK income i.e. our online job and interest from savings, etc.
> 
> Seems to me that would be your first step in sorting out your current affairs and it also covers your online job. You would just wait for HMRC's response. You will have kept HMRC fully informed about your Spanish income and your online job - sorted! Whatever they ask you to do, which would presumably be that you will fill in a self assessment in due course, you just do it.
> 
> ...


Student loan company contacting me asking where I was. I've sent them copies of my Spanish payslips and contract and explained that I will be back in June. 

Form P85 asks if I'm working full time abroad. I'm not - I'm working part time but there's no box for that.

I'm not currently doing any online job, so I wasn't going to fill in anything about that yet. I was going to get started and then register myself as self-employed a couple of months later. I need to establish first whether or not I'm 100% definitely tax resident in the UK and can register as self-employed while physically resident in Spain. The thing about the online work is that none of the employers are based in the UK, they're all based in the US or continental Europe, so there's no real place to put that on this form anyway.


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## brocher (Mar 21, 2011)

Clemmie00 said:


> Student loan company contacting me asking where I was. I've sent them copies of my Spanish payslips and contract and explained that I will be back in June.
> 
> Form P85 asks if I'm working full time abroad. I'm not - I'm working part time but there's no box for that.
> 
> I'm not currently doing any online job, so I wasn't going to fill in anything about that yet. I was going to get started and then register myself as self-employed a couple of months later. I need to establish first whether or not I'm 100% definitely tax resident in the UK and can register as self-employed while physically resident in Spain. The thing about the online work is that none of the employers are based in the UK, they're all based in the US or continental Europe, so there's no real place to put that on this form anyway.


Think you're mis-reading that. It says *do not* use Form P85 if you will be working 35hrs for a *full tax year*. This does not apply to you, therefore you do fill in this form.

The only way to 100% confirm that you are UK tax resident is to fill in the form and wait for HMRC's written response. 

Student Loan company will expect you to make direct payments to them on the assumption you are out of the UK (if you are earning over the threshold). However this will be incorrect as HMRC will be involved in collecting the payments while you are tax resident. Of course, HMRC can't do this because you haven't told them what you're doing yet! Does that sound a little complicated -yes - you should have sorted your affairs before you left!!!

I should think you should just declare your online income from other countries in the same way you declare your Spanish income when you come to do your self assessment.....but I'm no expert. I suggest you just get this form filled in, ask HMRC what to do about income from online work - and take it from there. 

The sooner you sort things out the better or it will just get more complicated.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> Think you're mis-reading that. It says *do not* use Form P85 if you will be working 35hrs for a *full tax year*. This does not apply to you, therefore you do fill in this form.
> 
> The only way to 100% confirm that you are UK tax resident is to fill in the form and wait for HMRC's written response.
> 
> ...


I'm not misreading it - the form asks if I'm working full time, yes or no? I'm not working full time, I'm working part time. Am I just being pedantic? Is it the same thing? 

The problem was that I only came here to LOOK for work. I didn't want to cancel and finish everything in the UK only to end up back there 8 weeks later. I hadn't even officially left my job - everything was left open for me. I'm surprised at how messy it all is. I've lived abroad many times and have never had a problem before. Blissful ignorance I suppose, but I'm surprised that things are made so difficult for people who only want to go abroad for a very short period and earn a bit of money to survive on.

I don't think the student loan repayments will be an issue, I'm earning WAY under the threshold.


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## brocher (Mar 21, 2011)

Clemmie00 said:


> I'm not misreading it - the form asks if I'm working full time, yes or no? I'm not working full time, I'm working part time. Am I just being pedantic? Is it the same thing?
> 
> The problem was that I only came here to LOOK for work. I didn't want to cancel and finish everything in the UK only to end up back there 8 weeks later. I hadn't even officially left my job - everything was left open for me. I'm surprised at how messy it all is. I've lived abroad many times and have never had a problem before. Blissful ignorance I suppose, but I'm surprised that things are made so difficult for people who only want to go abroad for a very short period and earn a bit of money to survive on.
> 
> I don't think the student loan repayments will be an issue, I'm earning WAY under the threshold.


Where/what are you reading - show me the bit . I can't see anyhing like that!

It's not messy or difficult really.


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## Clemmie00 (Jun 10, 2012)

Update: Called HMRC in the UK and they told me I don't need to complete form P85 because it's intended for people going away for longer than I am. 

The guy on the phone said I am classed as tax resident in the UK this tax year and will also be next year as well. I was surprised by that because I think I spent just under 183 days in the UK this tax year, but I'm not tax resident in Spain either. He said just to complete a self-assessment tax return in April with all the info from my UK job and my Spanish job.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> Where/what are you reading - show me the bit . I can't see anyhing like that!
> 
> It's not messy or difficult really.


Question 20 on the form.


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## brocher (Mar 21, 2011)

Clemmie00 said:


> Update: Called HMRC in the UK and they told me I don't need to complete form P85 because it's intended for people going away for longer than I am.
> 
> The guy on the phone said I am classed as tax resident in the UK this tax year and will also be next year as well. I was surprised by that because I think I spent just under 183 days in the UK this tax year, but I'm not tax resident in Spain either. He said just to complete a self-assessment tax return in April with all the info from my UK job and my Spanish job.


That's what I said right back at the start. 

You'd still do well to get this recorded officially now by putting it all in writing and having a written response from HMRC.

Don't see your problem with Q20 - just say "NO"


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## Clemmie00 (Jun 10, 2012)

brocher said:


> That's what I said right back at the start.
> 
> You'd still do well to get this recorded officially now by putting it all in writing and having a written response from HMRC.
> 
> Don't see your problem with Q20 - just say "NO"


Well, it wasn't that obvious as the guy had to forward me on to 2 or 3 people until they established whether I was resident or not. I still don't think I spent 183 there this tax year, but if I'm not resident there, then where I am I liable to pay tax? (hypothetically) I'm definitely not tax resident in Spain because I didn't spend 183 days there last calendar year and I won't be this year either. 

The problem I have in Q20 is interpretation. I consider my job full time because 19-20 teaching hours is full time in *teaching*. We don't get paid for the extra marking and prep. It's not technically full time, though, in most people's eyes. Depending on why they're asking the question, I thought this could be an issue.


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## brocher (Mar 21, 2011)

Well, it wasn't that obvious as the guy had to forward me on to 2 or 3 people until they established whether I was resident or not.

...all the more reason to get this done officially in writing, I would have thought. Of course, you will have to hope that HMRC don't start looking into your past affairs as you say you have not followed legal procedures when you have worked abroad ipreviiously.



I still don't think I spent 183 there this tax year, but if I'm not resident there, then where I am I liable to pay tax? (hypothetically) I'm definitely not tax resident in Spain because I didn't spend 183 days there last calendar year and I won't be this year either. 

183 days is irrelevant in your case, as HMRC confirmed n your phone call - the relevant part being that if you are resident in the UK for *any* part of the tax year and have only a temporary move abroad, you are UK tax resident for that year.

183 days is only relevant for permanent situations, and even then it is more complex than that. 

In any case, you can't jump about between "calendar" and "tax" years to suit yourself.



I consider my job full time because 19-20 teaching hours is full time in *teaching*. We don't get paid for the extra marking and prep.

....so what does that make teachers who do actually work full time, and still have marking and preparation. Not to mention many other professions who have much work to do outside their full time paid hours.


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## Clemmie00 (Jun 10, 2012)

brocher said:


> Well, it wasn't that obvious as the guy had to forward me on to 2 or 3 people until they established whether I was resident or not.
> 
> ...all the more reason to get this done officially in writing, I would have thought. Of course, you will have to hope that HMRC don't start looking into your past affairs as you say you have not followed legal procedures when you have worked abroad ipreviiously.
> 
> ...


I don't have an issue with my past affairs. I had never worked in the UK when I worked abroad previously. I only started working in the UK in 2011 and worked there full time until I left for Spain this September. 

I'm talking about 'calendar' years referring to the Spanish tax system. I mean that if I were to stay here a couple of weeks longer, I'd be tax resident in Spain for 2013. I'm delighted that this isn't the case. 

As for teaching, I don't know why 20 hours is 'full time' in TEFL, but it is supposed to be. Obviously in practice, plenty of people work 35 hour weeks because it doesn't pay enough otherwise, but the quality of your teaching suffers. I think you'll find that school teachers get very generous holidays including weeks off every summer. TEFL teachers don't. I get a week off for Christmas and a week off for Easter and that's it. No summer break and definitely no taking days off when you want.


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