Temporary return to the UK

[bedubabe]

It's looking like we as a family will be returning to the UK for a year. I will of course take paid expert advice before actually doing anything but can anyone help with:

• how the heck does the tax work? Will I just pay tax on my UK earnings or are they going to try to claw back my overseas earnings in the same tax year (earned prior to moving)? There is a double taxation treaty in place.

• how do the free pre-school hours work. Can we get them or do we have to be permanent resident?

• ditto on any eligible benefits - if we would qualify as a 'normal' family then do we qualify if we do not have an intention to stay long term. I'm having a moral dither about this one anyway so not asking if this is morally right :)

• childcare vouchers - am I right in thinking this is an employer offered scheme and therefore as long as my salary is coming through my UK employer I will qualify? Can you use them towards top-up preschool?

Anyone who knows anything (or can point me in the right direction), comments would be really appreciated.

Thanks

I'm pretty sure as part of HMRC Self Assessment you need to declare your overseas earnings and any tax paid there, but the DTT will determine where you should pay tax to ultimately. Unless your stay falls within the non-resident limit during the tax year or over past 4 years then you'd potentially be liable for UK tax see here.

afaik the free hours apply to anyone who is resident but whether you will find anywhere able to offer such a place at short notice now depends on the area in which you choose to live - the Local Authority website should have details of how they apply the policy. Childcare vouchers can count but not all employers offer a scheme.

As to benefits it probably depends whether you and/or dp/dh have paid NI contributions recently and where you have been living - EU residents may qualify on a comparable basis.

Thanks LIZS - I'm aware it might be a nightmare to find a pre-school place. Don't actually know which part of the UK yet which is making it difficult. It's either Leeds or London. Does it normally work the same way as schools i.e. you have to be resident before you apply or do they have more discretion? We'll have reasonable notice (this won't be until 2013).

Guess I'm going to have to call HMRC - always fun and from experience the answer can't be relied upon to not change. DTT indicates no tax on overseas earnings but I'm in the Middle East which is tax free anyway so wary that HMRC might try to get backpayments off me/DH.

Not EU residents and no NI contributions. Having an argument with DH at the moment on whether it's 'right' to claim even if we can since we have no intention of remaining in the UK. I'm sure there must be some rule stopping people like us (although of course we have both spent considerable periods working and paying tax in the UK in the past, I hasten to add :) )

Thanks again - anyone else who's been through this - comments welcome.

What benefits are you talking about? If you are British, and the children have British citizenship even if they are born abroad, then you should be eligible for child benefit as soon as you move back - that doesn't depend on NI contributions etc. I moved back to the UK after 12 years overseas with two DC born abroad (but with British passports) and was able to claim child benefit. I also got the 15-hours free nursery/preschool entitlement for DD as soon as we were resident here.

Most other things are means-tested or need you to have paid NI contributions for a certain number of years within a given time frame. I'm not sure about tax credits, though.

The system for finding preschool places is not as rigid as school places, as most of them are privately run. You will need to contact any you are interested in and ask how they deal with applications, if they have waiting lists etc. Bear in mind that it can be hard to find a place if you only want the free 15 hours - most of them make it difficult unless you are also paying for some extra hours.

AFAIK,you will become resident in the UK when you start living here again, even if it's only temporary. That means that for those tax years you will be taxed on your worldwide earnings (as all UK residents are), including what you earned in the Middle east. If you plan to stay in the Uk for more than 2 years, you could apply for split year treatment to avoid this, but for a year it won't be possible.

DTT is irrelevant as there's no income tax where you are now, and DTT work by taking into account tax already paid in another jurisdiction, and taking it off tax due in the UK.

didnt explain the DTT very well

Say you'd lived in France and had already paid income tax at 80% or whatever they charge these days , when you moved back to the UK, although as a UK resident theoretically you owe the UK tax man tax on your French earnings, they would take into account the fact that you'd already paid more in France than you would have had to pay in the UK, so they say "nothing further owing".

AFAIK,you will become resident in the UK when you start living here again

I wanted to comment on this, as it is no longer the case (and as I wasn't sure if the OP is a UK citizen). As of 9th July, the UK Government are introducing more stringent immigration policies which mean that if a UK citizen intends to bring a foreign-born spouse into the UK, they now have to meet new guidelines and the spouse is NOT entitled to benefits as soon as they enter.

OP - are you a UK citizen? If you're bringing in a spouse, are they as well? If not, you may want to check how these new rules will affect you. Please have a look at this:

www.migrationobservatory.ox.ac.uk/press-releases/women-young-people-and-non-londoners-are-most-affected-changes-family-migration-polic

and this:

www.bbc.co.uk/news/uk-politics-18511727

as a start.

Wanted to make you aware of these changes, as the BBC news article states "Claimants and their families are not guaranteed the right to stay in the UK if they are able to live together elsewhere"

Thanks all.

Both DH and I (and the kids) are British Citizens so luckily no worries there.

Richmanpoorman: that's not my reading of this particular DTT treaty but I don't really know what I'm talking about of course! It says "Subject to the provisions of Articles 15, 17 and 18 of this Agreement, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State."

Think I need to get some tax advice as backpaying income tax is a v. large bill!