Question:
I’m currently in Australia on a tourist visa so I can’t work here at the moment. I’m a UK sole trader in web design and development.
I’ve met a few Australian businesses who would like me to do some work for them. Can I invoice them from the UK when I’m back? Can they pay me with Paypal perhaps? Do I simply declare it in my self assessment in same way as UK income?
Any good links on having foreign clients if self employed in UK? I’ve Googled and the results are a bit hazy.
Many thanks,
Pete.
Answer:
Answer provided by Matt Walters at Capital Consulting SA, specialists in international tax planning for contractors.
From the way in which your question was phrased it strikes me that you are considering working for these clients while in Australia and invoicing when you return, rather than performing the actual work in the UK. It is crucial to understand the difference between these options. If you are performing the work in Australia, then you are taxable on that income in Australia as well as in whichever country you are tax-resident (in your case, probably, the UK). You are also working illegally given your work permit/visa situation. Where the invoice comes from and where the payment is made is quite irrelevant.
If, on the other hand, you are wanting to do this work when you return to the UK, then doing work for a foreign client is identical to working for a domestic client, the only exception being that VAT is not chargeable as Australia is outside of the EU. The method of payment, be it Paypal, bank transfer or other is quite unimportant, as long all income is declared. The income should be declared in exactly the same manner as for domestic clients.
The most efficient manner of handling this situation, then, is to do the work when you return to the UK, invoice your clients in the usual manner, and declare the income received to the UK tax authorities as you would normally.
Dec 16, 2008
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