Director Fees from Hong Kong Company

I received director fees from Hong Kong Company. Based Article 15 of the double taxation treaty, the income can be assessed in Hong Kong. Do I have to report this income thru self assessment? If yes, how should I do this? How to claim the the income to be assessed in Hong Kong?

Hi soyukki,

Yes if you are UK tax resident. Further guidance is at Tax on foreign income.

Thank you.

Hi HMRC, I have similar situation as soyukki. Article 15 of DTA between UK and HK states that Directors’ fees and other similar payments derived by a resident of a Contracting Party in his capacity as a member of the board of directors of a company which is a resident of the other Contracting Party may be taxed in that other Party. As my Director's Fees have already been taxed in HK, please confirm I don't need to report it again to HMRC based on the Article 15 above? Please advise. Thanks!

Hi Raymond Wong,

You will need to review the conditions set in the residence, domicile and remittance guidance, to determine your situation
(Residence, domicile and the remittance basis: RDR1).  
If you meet the criteria for applying the remittance basis, but choose not to, then you will need to declare the income in a self assessment tax return.
 You can claim a foreign tax credit relief, to avoid double taxation.

Thank you.

Hi HMRC, Thanks for your reply. Based on the SRT, I should be a UK tax resident, Non-domiciled. Do you mean that if I meet the criteria for applying the remittance basis and choose to do so, I need not declare this HK taxed Director Fee in the self assessment tax return pursuant to the Article 15 of DTA between HK and UK? Please advise. Thanks!

Hi,

If you choose to use the remittance basis, then you declare this on SA109 in boxes 28 to 39.  You would declare the HK taxed Director Fee not being remitted to the UK in Box 34 and box 40 is an explanation of box 34. 

Thank you.

Hi, Yes, I will use remittance basis and declare the HK taxed Director's Fee not being remitted to the UK in Box 34, and fill in box 40 is an explanation of box 34. But do I still need to fill in SA102, or I only need to give the details of the Director's Fee in Box 40 of SA109? Please advise. Thanks!

Hi,

SA102 would be completed for UK and foreign employment income plus tax being declared. SA106 would also be completed for foreign employment, where a foreign tax credit is being claimed.

Thank you.

Hi, Noted and thanks! But is this HK taxed Director's Fee as reported in SA102 and Sa106 (i.e.foreign tax credit claimed) still subject to UK tax if I choose to elect remittance basis in SA109 and not to remit them into UK? For your easy reference, I am a UK resident and non-domicile under SRT. Please advise. Thanks!

Hi Raymond Wong,

If claiming the remittance basis and not remitting it in the UK, then the question of which box is irrelevant. see guidance at Paying tax on the remittance basis (Self Assessment helpsheet HS264).

Thank you.

Hi, Thanks for you reply. But my question is whether this HK taxed Director's Fee as reported in SA102 and Sa106 (i.e.foreign tax credit claimed) is subject to UK tax if I elect remittance basis in SA109 and NOT to remit them into UK? Please help clarify. Thanks!

Hi Raymond Wong,

If you elect to use the remittance basis, you would not show the income in SA102 and SA106.  

Instead, box 34 of SA109, is where you show the amount of income that you are not remitting to the UK, along with an explanatory note in box 40.  

Gains not remitted to the UK, are shown in box 35.

Thank you.

Dear HMRC, Thanks for your reply which is definitely clear and helpful! By the way, if I also have foreign interests, dividends and gains but "without" any foreign tax paid on those, do I still need to put these incomes and gains in SA106 if I elect remittance basis and NOT to remit these incomes and gains into UK? Or I only need to put these incomes and gains in Box 34 and 35 in SA109 with explanatory notes on Box40? Please help further clarify. Thanks!

Hi Raymond Wong,

If you are not remitting the income to the UK it should not be included.

Please see this guidance: 

Paying tax on the remittance basis (Self Assessment helpsheet HS264)

Thank you. 

 

Hi, Further to my above question, do you mean that I do not need to complete SA106 for those foreign dividends, interests and capital gains (assume they need not be taxed overseas) but only need to include them in Box 34 and 35 in SA109 with explanatory notes on Box40? Please clarify. Thanks!

Hi Raymond Wong,

Please refer to the full guidance notes at:  Foreign notes

Thank you.

 

Hi, officers of HMRC Let me reorganize my above questions as below: 1.) If I ONLY have income of foreign interests, foreign dividends and foreign capital gains (assume they need not be taxed overseas), 2.) If I elect remittance basis and NOT to remit them into UK, Do I not need to complete SA106 and SA108 for those foreign interests, foreign dividends and foreign capital gains (assume they need not be taxed overseas) but only need to include them in Box 34 and 35 with explanatory notes in Box 40 in SA109 ? Please help clarify. Thanks!

Hi,
If you qualify to apply the remittance basis, you only need to complete boxes 28 to 40 of SA109, as appropriate.
 If you later bring the money from the income / gains to the UK in a future tax year, then they are taxable in the UK in that future tax year to do remit them.
Thank you