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Posted Tue, 20 Feb 2024 16:53:34 GMT by
Hi, Can you please help me with the following situation? I currently live in Edinburgh and my last employment ended in November 2023. I've most likely found a new role, which would start during March 2024 and is fully remote. The tricky bit is that this company resides in Israel with an accounting done from Slovakia (possibly having another branch there) so that's where the monthly salary would be sent from as well. The annual income would not be more than £45,000. As they don't have an entity in the UK, I presume I would have to register as a solo trader (until the 5th October 2024) and fill out a self-assessment after each tax year to pay income tax and national insurance? So if I start in a month, I will have to fill out the self-assessment with the details from the full-time UK based job I had until November 2023 and then state the partial income from March 2024? Further questions below: - Double Taxation: Since I am not a resident of either Israel and Slovakia, I assume there should be no taxes taken on their side and I'll just report the income and pay taxes here in the UK during the self-assessment? - Exchange Rate Fluctuations: Since I will be most likely paid in EUR, how to handle exchange rate fluctuations when converting salary to GBP for tax reporting purposes, especially since it will be reported after the tax year? Do I just report what I actually received in the end after the bank converted it? - Business Expenses: As a solo trader, will I be able to claim a laptop purchase as a business expense, as that will be necessary for this work? If there are any other important implications or changes I need to be aware of before doing this, please let me know. Thank you very much, Jaroslav
Posted Wed, 21 Feb 2024 13:19:49 GMT by HMRC Admin 19

You can see guidance here:

Tax on foreign income

For exchange rates you can use any within the relevant tax year here:

HMRC currency exchange average rates

Thank you.
Posted Thu, 22 Feb 2024 09:54:31 GMT by Jaroslav Miko
Hi, thanks for the reply, albeit a bit general. Follow-up questions: 1) If I receive the salary already in GBP, is there any need for conversion? 2) If the salary is sent in EUR every month and converted to GBP by my bank, then I use the latest available HMRC exchange rates? 3) What is the deadline for self-assessment registration considering my employment (foreign income) starts in March 2024? 4) Could you provide guidance on how to avoid double taxation on my income, considering it originates from Israel but is processed through Slovakia? Are there specific forms or agreements I should be aware of to claim tax relief? 5) For the purpose of filling out my self-assessment tax return, how should I report the income received from the foreign company alongside the income from my last UK-based employment that ended in November 2023? Should these be reported separately, and how does this affect my tax calculation for the 2023/2024 tax year? 6) As a contractor working for a foreign company, what expenses am I allowed to deduct for tax purposes? Are there specific rules for deductions related to foreign employment income? Thank you, Jaroslav
Posted Mon, 26 Feb 2024 15:04:55 GMT by HMRC Admin 19

Self Assessment does not provide an official exchange rate, so the onus is on you to use a just and reasonable exchange rate. This means that we cannot give a decisive answer for questions 1 and 2.

The deadline for registering for Self Assessment for the 2023 to 2024 tax year is 5 October 2024. Penalties may be imposed after that date.

You will need to review the tax treaty between the UK and the country where the income arises. If the treaty allows the other country to deduct tax, you can claim a foreign tax credit on your UK tax return. If the treaty confirms the other country cannot deduct tax, you will need to request a certificate of residence and send this to the relevant country.

How to apply for a certificate of residence to claim tax relief abroad

Foreign employment income is declared on SA102 supplementary page and if foreign tax is payable, then you declare this on SA106, so that you can claim a foreign tax credit.  

If you are resident in the UK and undertaking remote employment outside of the UK, you will be limited to employee expenses premitted in the UK. You can see guidance here: 

Claim tax relief for your job expenses

Thank you.

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