Quick tax question

[JakeF]

Primarily aimed at SMS and others, but just want a quick clear up of what my tax liability is likely to be and how it works, as my HR havent given me a clear answer.

My situation:

Joining IB as graduate officially in February, but will be in London for 2months until the middle of April, at which point i will fly out to Singapore, and will be based in Singapore for the next however many years. I am employed by the A-P subsidiary of the bank, handled by A-P HR and paid in SGD.

HR have said that my sign on will not be taxed until the end of 2011..? Could someone explain how it will all work if its not too much trouble? Bit confused on how much, when, and where ill likely be liable for tax over the next year and half or so.

[carteki]

Tax in Singapore is paid annually in arrears and not deducted from your salary. It has been discussed ad nasueum - take a look at http://www.iras.gov.sg or use the search function for similar posts in the forum....

[sundaymorningstaple]

You will be taxed on your income earned once you arrive in Singapore. Your tax liability to Singapore will start when you arrive in Singapore and are given your Employment Pass. From the date you arrive in Singapore (not necessarily the date you started working) till the end of the year, if it exceeds 183 days (if you start in April, no problem) you will be treated as a Tax Resident for Income Tax purposes. Actually, even if you were to arrive in September, as long as an EP is given to you of at least 12 months duration, IRAS will treat you as a tax resident for the partial years anyway.

Regarding you tax liability, there aren't many deduction available against gross income so in that respect, taxation here is rather simple but effective and quite low. In order to figure out your tax liability use this site to get a handle on it........

http://iras.gov.sg/irasHome/taxcalculators.aspx

Additionally, Singapore does not use a PAYE system, but you will get a tax bill about 3 months after you file your tax return (Tax Returns are due for the previous years, not later than 15 April of the following year. You will probably receive your tax bill somewhere around July-August. And yes, you will not have to file a tax return until the end of 2011. If your tax bill is large enough there is a payment plan that can be utilized (more info here: http://iras.gov.sg/irasHome/page03a.aspx?id=1530 )

If you have any further questions let me know.

[JakeF]

Thanks for the answers guys. Didnt know that Singapore tax was paid in arrears, a rather strange system if you ask me, but then thats me coming from a PAYE system!

I have used the calculators before, and know roughly my liability.

I imagine, you have to make sure you have enough set aside to cover your estimated tax liability come year end? My 12m liability is around S$11.5k, so i can pay that in one go?

This may sound stupid, but im right in saying that i shall get a tax bill in July/Aug 2011 for the income earned from the day i step foot in Singapore (My EP will be >12m for sure) and then i file a tax return at the end of year paying for the tax ive accumulated until year end?

'Tax return' to me is the gov returning overpaid tax to the payer, but in Singapore, it seems its the opposite?!

For the two months pay in the UK, im assuming it shall be at UK tax rates..? (I hope to god it isnt!)

Apologies for the questions

[JakeF]

scrap those last questions. Have it about figured out now. Cheers guys.

[sundaymorningstaple]

Your actual tax bill will come in July-August 2012. You will file sometime after 1 January 2012 for income earned in 2011. Yes, you can opt to pay your taxes in one fell swoop (the best way to do it - provided one is strict enough about setting aside the estimated tax AYE.

[curiousgeorge]

I could add that being in the UK for a couple of months confuses things a bit, but its mostly good news.

The UK taxes your income based on where you earn it. (if you don't earn it in the UK, you don't pay in the UK).

Singapore taxes your income based on where you discharge your duties. (if you don't work in Singapore, you don't pay in Singapore).

Theoretically, if you're being paid in Singapore while you are working in the UK, then there should be no liability in either UK or Singapore for that period. However, anyone in the UK must register with the Inland Revenue and declare any earnings for that period (the declaration is knows as a "tax return").
Its a lot of paperwork for essentially no difference in outcome...you enter all your income details for the period you were in the UK, but the fact you were paid outside of the UK means that you won't get a tax bill.

Now, if you are a US Citizen, I believe that federal taxes are applied on any earnings worldwide...that is down to your US income declaration and I don't know much about that.

[sundaymorningstaple]

I didn't go into that as I believe he'd already said he was from the UK. No reason to open up that old can of worms again. (I'm a Yank, grumble, grumble!)

[JayCee]

I could add that being in the UK for a couple of months confuses things a bit, but its mostly good news.

The UK taxes your income based on where you earn it. (if you don't earn it in the UK, you don't pay in the UK).

Singapore taxes your income based on where you discharge your duties. (if you don't work in Singapore, you don't pay in Singapore).

Theoretically, if you're being paid in Singapore while you are working in the UK, then there should be no liability in either UK or Singapore for that period. However, anyone in the UK must register with the Inland Revenue and declare any earnings for that period (the declaration is knows as a "tax return").
Its a lot of paperwork for essentially no difference in outcome...you enter all your income details for the period you were in the UK, but the fact you were paid outside of the UK means that you won't get a tax bill.

Now, if you are a US Citizen, I believe that federal taxes are applied on any earnings worldwide...that is down to your US income declaration and I don't know much about that.

Register as a UK "non-resident" and you won't have to fill in a tax return, you will no longer be a resident of the UK therefore not liable to declare any income you earn abroad nor pay any tax on it (of course, if you still have income in the UK such as money from renting out your house then you need to do a tax return for that, but you don't need to tell them anything about the money you earn abroad).

There are rules around how many days per year you are allowed to stay in the UK before you become "resident" again though, so you'd need to check that out as I don't know if 2 months is over the threshold or not

I never tell the UK authorities what my income is abroad, I pay tax on the income that I earn the UK and that's it, no mention of what I've earned in HK, Singapore etc.. over the years

[curiousgeorge]

Register as a UK "non-resident" and you won't have to fill in a tax return, you will no longer be a resident of the UK therefore not liable to declare any income you earn abroad nor pay any tax on it (of course, if you still have income in the UK such as money from renting out your house then you need to do a tax return for that, but you don't need to tell them anything about the money you earn abroad).

But if he is from the UK and remaining the in UK for the two months work in London, he can't just 'register' as non-resident, at least not until he moves to Singapore. The standard required to prove non-residency got much harder a couple of years back, you have to demonstrate all sorts of things, such as no permanent residence in UK. Someone always have to have a residency (although can be "not ordinarily resident" in the UK AND resident at the same time!), and the UK now looks at your total lifestyle and where you closest ties are, and your intentions for the future.
If you try getting declared non-resident but tell them you plan to come back to UK in 18months, you won't get it.

[JayCee]

Register as a UK "non-resident" and you won't have to fill in a tax return, you will no longer be a resident of the UK therefore not liable to declare any income you earn abroad nor pay any tax on it (of course, if you still have income in the UK such as money from renting out your house then you need to do a tax return for that, but you don't need to tell them anything about the money you earn abroad).

But if he is from the UK and remaining the in UK for the two months work in London, he can't just 'register' as non-resident, at least not until he moves to Singapore. The standard required to prove non-residency got much harder a couple of years back, you have to demonstrate all sorts of things, such as no permanent residence in UK. Someone always have to have a residency (although can be "not ordinarily resident" in the UK AND resident at the same time!), and the UK now looks at your total lifestyle and where you closest ties are, and your intentions for the future.
If you try getting declared non-resident but tell them you plan to come back to UK in 18months, you won't get it.

Why would he tell them he plans to come back to the UK in 18 months time? He stated he plans to be in Singapore for "the next however many years", just fill in form P85 and say you're leaving permanently.

Links below taken from the uk revenue and customs website, form P85 is the one and it looks the same as it did 5 years ago when I left, no mention of having to provide proof of having no permanent residence in the UK (how could you prove that anyway?)

http://www.hmrc.gov.uk/cnr/faqs_general.htm#3nr
http://www.hmrc.gov.uk/cnr/p85.pdf

OP - I made the assumption that you would go to Singapore first, if only for a few days to pick up your EP and set up a bank account, then return to the UK for the 2 months, as you mentioned you will be employed by the Singapore office and paid in SGD. If this is the case, you can fill in P85 before you leace and you should be ok, as 2 months is less than the average of 91 days a year over 4 years that you're allowed and which they refer to on the website above.

If this is not the case and you won't be stepping foot into Singapore until April, then how can you be paid by the Singapore office in SGD when you've not got a Singapore bank account nor picked up your EP yet? Will you be an employee of the London office and paid in GBP for the first 2 months and then effectively transferred to Singapore? If so, then of course you'd be liable to UK tax for those 2 months. This is where the situation is getting confusing, who will you be employed by for those first 2 months?