Income Tax
Most countries have an agreement with the UK such that earnings which are subject to UK tax are not taxed again in your home country. See the HM Customs & Revenue website for more information on double taxation relief. Each country has its own requirements and you may have to sign a declaration or take some other action before leaving home (such as submitting a POB form in South Africa). You will probably have to be out of your home country for a specified time before this relief can apply.If you wish to avoid having your earnings taxed in your home country, you should make arrangements to pay UK tax and National Insurance Contributions (“NICs”). For this, you will require a National Insurance Number; information on how to obtain one is given below under “National Insurance Contributions”.
UK tax year runs from 6 April to 5 April the following year, so only part of your earnings may fall into any one tax year. If you are self-employed, you will need to submit a Self Assessment Tax Return by 30 September if you want the tax which is payable to be calculated for you. If you are an employee, both income tax and NICs will be automatically deducted by your employer and there is, normally, no need to complete a tax return. See the HM Customs & Revenue website for more information on Self Assessment.
Income tax allowances and taxable bands are shown on the HM Customs & Revenue website. Because it is essential that you live in the Client’s house to perform your duties, the value of the accommodation there will not be treated as a “benefit in kind” and added to your earnings for tax purposes. Self employed people can also claim certain expenses incurred as a result of their employment, such as their Public Liability Insurance, consumable items (disposable gloves/aprons) and the cost of cleaning clothing soiled while working.
Value Added Tax (“VAT”)
Apart from a few exceptions, such as childrens’ clothing and certain food items, 17.5% VAT is added to the basic price [Note: This has been temporarily reduced to 15.0% until 01 January 2010]. Prices shown in shops normally include the VAT. There are no additional Sales Taxes.
National Insurance Contributions (“NICs”)
To pay UK tax and National Insurance Contributions you will require a National Insurance Number which is issued by the Department for Work & Pensions. You should telephone them on 0845 600 0643 once you have started work, to make an appointment at which you will need to prove your identity, your UK address and to establish that you are working. Only original supporting documentation (not photocopies) will be accepted. You will normally be sent a plastic card with your NI number about six weeks after the meeting, assuming everything is in order.
If you are self-employed, you should register for the lower (Class 2) NICs as soon as you have your NI number by calling the HM Customs & Revenue Self-Employed Helpline and asking to be sent a registration form.
The Department for Work & Pensions website gives information about location of offices, National Insurance numbers, NICs and the application process.
The amount you must pay in NICs depends on your employment status:
If you are an employee below state pension age, you must pay Class 1 NICs on your gross earnings which fall between the Primary Threshold and Upper Earnings Limit per week. Rates and Allowances for National Insurance contributions are shown on the HM Customs & Revenue website.
If you are self-employed, you will have to pay Class 2 NIC contributions as shown by HM Customs & Revenue.