Consumer rights: 'Will I pay two lots of tax if I work in New Zealand for a UK company?'
A guide through complex international taxation / Dealing with the consequences of an inept neighbour's DIY
Sunday 24 April 2011
Q. I am going home to live in New Zealand after five years here in the UK.
My current boss doesn't want to lose me, which is flattering, and has suggested that I work for her in New Zealand. That's not a problem as the work is web-based so I can do it anywhere and at anytime. But where will I stand as far as tax is concerned? I'm worried that I will have to pay tax in New Zealand but also in the UK. Can you advise please?
A. It is not unusual for someone who is resident in one country to earn money in another. Some people may have to pay tax on that gain locally and pay again in the country in which the gain was made. But because that's somewhat unfair, many countries make bilateral double taxation agreements with each other in which tax is paid in the country of residence and not in the country in which it arises. New Zealand has a double taxation agreement with Britain, so you'll only pay tax once.
Under UK tax law if you work overseas for a British employer, the tax you pay depends on where your employer is based, where you work and whether you are "resident", "ordinarily resident" or "domiciled" in the UK. The rules are a bit too long to go into in detail, but as you won't be resident in the UK you'll pay tax on your earnings in New Zealand. Independent financial adviser Simon Hodge says "speak to HMRC or the NZ equivalent and confirm that you are being paid by a UK-based company and the level of income you are receiving. The two tax offices will liaise to make sure you are only taxed once". You can read all the rules on the HMRC website www.hmrc.gov.uk
Q. My next door neighbour is a DIY enthusiast. That's not to say that he's good at DIY. His latest venture resulted in a hole in my bathroom wall. Unfortunately he drilled through a water pipe too. Luckily this is a spare bathroom but it's a wet mess of plaster dust and broken tiles and the water has been turned off because of the hole in the pipe. All the tiles will have to be renewed as I can't get any to match.
I want my neighbour to put right at his expense, by a proper builder, plumber and tiler. He says he will do the work – which is the last thing I want – and that if I want other tradesman in I can claim for it on my insurance. I don't see why I should have to do that. I want to get the bathroom functioning again as soon as possible and he refuses to tell me the details of his insurance company so I can get mine to settle the claim with his. So far I've managed not to lose my temper but I'm close to it and don't want an ongoing neighbour dispute. Where do I stand?
A. If it's any consolation, this isn't a one off. We spend millions every year putting right DIY disasters. You have every right to have the damage made good by your neighbour if he caused the problem. You do have to be reasonable though. You can't have your whole bathroom retiled with hand-made Italian tiles if it had bog standard tiles to start with, but it should be put back to the state it was in before this unfortunate escapade.
I wonder whether your neighbour is holding back because he doesn't have any insurance against which he can claim and is worried about the cost. You could contact your insurance company and give them the details of the damage and the incident and leave it to them to sort it out with your neighbour. The insurance company will probably want three quotes and then will give you the go ahead to get the work done. You'll probably have an excess on your policy and if the job isn't very big in financial terms it may be that you have to pay it all. If your insurance won't pay, or won't pay enough to cover the work, or won't pay anything because of the excess, you will have to chase your neighbour for the money or lose it.
Take photos of the bathroom. Get quotes for the repairs. Talk to your neighbour about how it should be resolved. Negotiate a settlement if at all possible. If you get no satisfaction from your neighbour or your insurers you will have to decide whether or not to pursue your claim through the small claims procedure in the county court. You will have to prove that your neighbour did cause the damage but he doesn't seem to be denying it and with the photos you should have most of the proof you need. Although you can make your claim in court without a solicitor, a solicitor's letter might be all that's needed to get a response and resolve the matter.
The bigger issue is your long-term relationship with your neighbour. You're right not to want this to become an ongoing dispute. Stay calm and try to resolve this amicably. Be very slow to go to court. People have had to sell up over less.
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