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by Leo23 » Thu, 13 May 2010 3:41 am
Hi mateyboy,
I am in the same exact predicament as you are. I run a UK limited company and have been approached for a contract job in Singapore.
After going through the interview process, and from speaking with a UK tax attorney, it has been decided that the best approach would be for me to contract directly to the client in Singapore and not have my limited company involved. My contract could have been six months or 1 year. I chose the 1 year option, also with a view to perm. Rates are much lower than the UK and having to pay corporate tax in the UK would make it very difficult to be profitable. VAT could be excluded, since it could not be collected...
UK tax is based on residency status. Residency test, from what I understand, is if you are away for an entire tax year, then you would not be subject to having to pay any UK tax. To avoid any UK tax, at this point, you would need to be in Singapore, or abroad outside the UK, until April 2012.
Since the 2010-2011 tax year is already underway, if you came back to the UK after 6 months, or before April 2012, you would have to top-up the tax paid in Singapore to what would have been charged on the same income in the UK. If your six month contract is worth $100k then you would owe $7,100 to IRAS in Singapore. Generally, you can deduct rent/utils/living expenses from your income to calculate your UK tax liability. If it comes out to less than your Singapore amount, then you owe nothing. If it is more than your Singapore tax paid, then you need to pay the difference. For example, if your rent is $3k/month and other associated expenses (electricity, phone, water, tv license, etc.) are another $1k/month for six months you can deduct $24k from your UK taxable income. For $76k (£37k), you would owe roughly £2,400 as the total tax bill would be roughly £5,800 and you've already paid £3,400 equivalent to Singapore...Best to speak to an attorney though for a more thorough view...
Are you a member of PCG? You can look on that website to find some information around tax attorneys and who to contact.
As for setting up a similar situation once in Singapore, perhaps others on here can assist with that. It could be an option but could also take many months to register the company, get it approved, get the necessary work permit for yourself, etc. and you run the risk of the company being rejected. I think contracting directly to the client with the view to perm may be the best option...