Working abroad tax issuesBack to Forum
Advice needed please.
This summer my step daughter is off to work in Monrovia Liberia for 2 years as part of a scientific project. She previously worked in Sierra Leone for 18 months but over 2 stints and for PHE.
She will be working for an American university who have offered her a great salary and 25 % benefits. The contract is for 2 years but will probably be extended.
Q1 She will seek advice from a tax adviser specialising in foreign contracts. What types of questions should she necessarily ask. She will be renting her house out for the duration.
Q2 The benefits are negotiable, return and interim flights are included in the contract, not classed as a benefit. What else apart from housing and security should she be looking at?
Would appreciate some help.
Thanks23 Feb 2021
Sounds like the tax side is quite straightforward. A good accountant will advise….as I understand it tax to be paid on UK rentals but otherwise UK has a DTA with Liberia.
On the benefits – car/driver, medical, relocation expenses are the ones that come straight to mind. Plus if there is a difference in cost of living that can be factored in.23 Feb 2021
If my memory serves me, isn’t there some potential issue with HMRC regarding primary residences (and the preferential tax treatment they receive) if they have been rented out for an extended period of time? You might want to have your daughter run that past any tax accountant just so that she does not get hit down the line by an unexpected impost.23 Feb 2021
Any property she rents out in the UK will be subject to tax by HMRC, as she will be classed as a non-resident landlord. Tax will be deducted at the basic rate by the agent or tenant and handed over to the taxman. Alternatively she can apply for a self assessment and make the usual annual return if this is accepted by HMRC. Unless she is a delinquent tax payer there is no reason for them to refuse this. They will issue a confirmation which can be shown to the rental agent / tenant so that she receives the rent in full. She will also be able top claim her person tax allowance.
Generally speaking, income from Real Estate is taxed in the country where the income is derived, so this will not be an issue for her income in Liberia. However, while it won’t be taxed, it may be added to her income in order to establish the rate of tax she must pay on her overall salary.
Her main concern should be how she is taxed in Liberia. For this she needs advice.
As for benefits, she should also consider electricity and water, especially if she has to conduct business from home. However a word of caution, the son of a friend of mine who was being posted to Japan by an accounting major, had such a long list of requests, thinking to go large and getting maybe half, was dropped in favour of another colleague who’s requests were much less demanding!!25 Feb 2021
Thanks to all, appointments arranged with a tax advisor, lettings agencies, she needs to be there by April 19th to start the project and meet the health minister etc.
To say she is excited is beyond belief although her mother isnt so.
Flight wise for our visits will probably be via Accra. Although I understand she will be going Air France.6 Mar 2021
Make sure that she has a good security and medical package that includes COVID related illnesses and repatriation coverage.
The advisor will be able to talk all things tax with her including the letting and management of her property.
Other thing I would say make sure that a relocation agent is included to help find her new home as it can be a minefield knowing good areas from bad areas.8 Mar 2021
Oh, and one other thing….
A god-daughter who accepted a DFID (as was) assignment had a RTA locally in Rwanda: an army truck jumped a light and nearly took out the moped she was riding. The injury was to one of her eyes and the consequences have been long lasting. Do check out not just health insurance but that she knows just which hospitals to go to locally because I imagine that the quality and range of medical skills/services may vary widely.9 Mar 2021