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Posted Thu, 28 Jul 2022 13:04:10 GMT by Expatquestions Confused
Dear HRMC team, Whilst employed in Dubai I was subject to a "bond" of around £30,000, with a penalty for leaving my job unless a certain number of years had passed due to training costs incurred by the company. The bond is for these training costs. This penalty of £30,000 would have to be repaid immediately by me from my income that I had earnt from employment in the UAE before I would be permitted to leave the UAE. I earnt £80,000 during the period of employment in question. My question therefore is: in reporting "foreign income earnt", can I declare that it is actually a figure of £80,000 minus £32,000 and thus a final total earnt of £48,000? Is this correct?
Posted Thu, 28 Jul 2022 15:04:01 GMT by Expatquestions Confused
Apologies the last paragraph should read: My question therefore is: in reporting "foreign income earnt", can I declare that it is actually a figure of £80,000 minus £30,000 and thus a final total reportable foreign income earnt of £50,000? £50,000 is all I would have to report?
Posted Fri, 29 Jul 2022 13:52:47 GMT by HMRC Admin 25
Hi Expatquestions Confused,
Based on your earlier questions, would you actually be declaring this income to the UK if you were claiming relief under the DTA.
If you are asking to ascertain the figure for the DTA claim, it would still be the £80000 that would be shown as this is the amount that Dubai would have as your income. 
Thank you.
 
Posted Fri, 29 Jul 2022 14:24:49 GMT by Expatquestions Confused
Hi HMRC, Yes, I would be declaring all foreign income to the UK as I believe that that is what I need to do when claiming relief under the DTA. First declare all foreign income and then provide evidence (treaty residence) as to why it is not subject to UK income with the expectation that no tax is due on that foreign income. However the DTA relates to tax year 2020-2021 in which I meet the requirements to be treaty resident. Unfortunately, I am unable to claim treaty residence in the 2021-2022 tax year as I did not spend 180 days in Dubai in this current tax year. As a result it seems that my foreign income in tax year 2021-2022 WILL be subject to UK tax as I cannot claim treaty residence or split year on this occassion. The return of income I had had paid to me back to my employer as part of my employment bond occured this year in tax year 2021-2022 (the year I am subject to UK income tax on foreign income). The income earnt in tax year 2021-2022 is £80,000 but £30,000 must be returned back to my employer as part of the bond. My question was therefore whether for tax year 2021-2022 for "foreign employment income" do I report £80,000 (the amount I earnt but without considering income my employer demanded be returned) or do I report £50,000 (the amount I finally ended up with earning abroad after returning income to my employer). Many thanks for your help!
Posted Mon, 01 Aug 2022 10:00:34 GMT by HMRC Admin 17
 Hi,
 
As you are returning the money back to the employer, you have not technically earned it.

As such, only the £50,000 would need to be reported   .

Thank you.

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