[actiongirl76]

The question is:

If I go to NZ and take up a job, presumably I will paying NZ tax at source. However, if I still have income from a UK business (which I own on a self employed basis) who do I owe the tax to?

I won't be returning to the UK for at least 2 years, so surely I won't be resident for tax purposes. However, I am also not resident in NZ - as I am on 12 month work visa.

I'm confused! Can anyone shed any light

Many thanks
Actiongirl

[jryorkshire]

In respect of the NZ job, assuming you will be in NZ for more than 183 days and are an employee, you will pay tax at source (PAYE will be deducted by your employer). Due to the way PAYE is calculated, on an annualized basis, you should be due a refund for any part tax years in NZ. (See below re tax on this income in the UK.)

In respect of the UK self employment this is not so straight forward.

Generally:-

Under NZ domestic rules if you are present in NZ for more 183 days in any 12 month period you will be a tax resident and liable to income tax in NZ on your worldwide income, this will include the self employment.

However, if you are also a tax resident of another country which has a double taxation agreement(DTA) with NZ then the DTA will deem you a resident for tax purposes in only one of those countries.

Under UK domestic rules you will be a tax resident of the UK if you are present in the UK for more than 183 days in any tax year (ending 5 April). Also, you will be a tax resident of the UK where you are personally present in the UK for more than 91 days on average over a 4 year period.

Accordingly if you are only absent from the UK for 2 years and then return to the UK, it is likely you will remain a tax resident of the UK. If so the DTA will likely treat you as a deemed tax resident of the UK through your travels.

On the above basis, you will be taxed in the UK on your worldwide income throughout your travels (including your NZ income) and in NZ on your NZ income only.

You should be entitled to a tax credit in the UK for NZ tax paid (restrictions as to the amount of the credit allowed will apply - generally the lower of the UK tax due and the NZ tax paid).

John