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Employee working in Singapore

Employee working in Singapore

Hi I have recently taken on a payroll following the payroll person leaving. The payroll has a handful of UK employees that have been working in Singpore and eventually located to Singapore in th year ended Dec 2011.

From what I can see PAYE has been operated on their earnings for the period they were on the UK payroll. As the employer will be paying all of the Singaporean tax arising up to the point they were on the UK payroll following the completion of the 2011 Tax Return, am I right in thinking the only way in which the company can obtain DTR is by making an adjustment to the final payslips of the relevant employees in 2011/12 prior to the submission of the P35. Is this correct or is there an alternative way? I am concerned as a couple of the employees were issued with P45s and therefore unsure as to how to go about amending the P14s that will be submitted to HMRC.


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02nd May 2012 17:19

There are many variations of tax equalisation, but usually an employer will agree to pick up the overseas country tax bill and in return deduct and retain hypothetical home country tax (UK in this instance) from the employee based on their stay at home remuneration. The hypothetical tax is used by the employer to help fund the payment of the overseas country tax.

Assuming your employees are likely to break UK residence i.e. work in Singapore for a complete UK tax year, the accountancy firm that deals with your expatriate population would usually have submitted forms P85 to HMRC and requested NT codes so no real UK tax would have been paid over to HMRC. Calculations of hypothetical UK tax would also usually have been prepared so you know how much to deduct and retain from each employee to arrive at their net pay.

I suggest you refer to the Company Tax Equalisation Policy and liaise with the firm of accountants dealing with the personal tax returns of your expatriate employees to ensure everybody fully understands the current situation.

You need to be careful as your Company could pay the overseas taxes on behalf of an employee without the comfort of a hypothetical UK tax reserve in the bank. Employees armed with a P45 have been known to claim a PAYE tax refund directly from HMRC and then disappear, thus not paying any tax in the UK or overseas in Singapore.



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By Hansa
02nd May 2012 17:44


Singapore personal taxes are among the lowest in the word starting at 0% and ending at 20% above S$320,000. (approx £160,000 p.a.).  Once employees are resident in Singapore for over 183 days they are liable to Singapore taxes.  Assuming the UK employees have submitted P85's on departure, I cannot for the life of me understand why the complex schemes outlined above should be entered into.


(a) They are not UK resident and their earnings do not arise in the UK

(b) They are Singapore resident and are liable to Singapore taxes (which are considerably lower than UK taxes).

Why not just leave it there? refers

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