Andrew Baker - Taxation Consultant
www.baktax.com
UK tax advice for residents worldwide – including Non-Resident Landlords, Pilots, Aircrew, Seafarers, Yacht Crew and Non-Doms
Telephone:
+44 (0)1243 582926
Mobile: +44 (0)7795671536
Email: baktax@aol.com
Pilots and Aircrew
If you are a pilot or cabin crew with duty flights in or out of the UK, either all or a proportion of your earnings are likely be assessable for tax in the UK. This is subject to whether you can claim to be regarded as not-resident in the UK, the provisions contained in the double taxation agreement between the UK and the country where you reside and the availability of claiming personal allowances and expenses.
Foreign National Pilots and Aircrew
Many airlines such as Ryanair and Easyjet are employing a large number of pilots from overseas e.g. Sweden, Denmark, Norway, Germany, Ireland, France, Netherlands, Belgium etc., who remain living in their home country but commute to the UK to take up their flying duties.
If you are in this situation, you are probably paying UK tax in full on your earnings through your employer's payroll under PAYE, despite being not-resident in the UK. The good news is you can claim a refund of the tax deducted in respect of the proportion of your earnings from non-UK duty flying time. This is provided you have not made a permanent move with your family to the UK. However, you should take local advice on your tax position in the country where you live.
UK National Pilots and Aircrew
Following on from the tax case of the British Airways pilot Shepherd, it is not so easy for UK national pilots and cabin crew to claim a non-resident status, even where flying time outside the UK remains within the UK visit limitations.
It will be necessary to demonstrate that you have made a permanent move to another country and settled there, to have a chance of your claim succeeding. Local taxation advice should also be taken in that country.
Statutory Residence Test
Since 6th April 2013, under the statutory residence test, for those working in transportation and where 80% or more of working trips involve cross-border trips during the tax year and at least 6 or more of those cross-border working trips either start or end in the UK, one’s residence status cannot be determined under the third automatic overseas and third automatic UK tests.
If neither the first nor second automatic overseas or UK tests apply, one’s residence status is determined by the sufficient ties test. Therefore, the number of specific UK ties will in turn determine the maximum number of midnights one can spend in the UK and still qualify as not-resident.
Record Keeping and Fixed Expenses
There are fixed times agreed with HMRC for flying in UK airspace, report time, debrief time, turnaround time, layover time etc., in order to calculate the proportion of earnings liable to UK tax. Also fixed rate expenses for pilots and cabin crew agreed with HMRC can be claimed to cover the cleaning of uniforms etc. Tax relief on two thirds of professional subscriptions to BALPA and one half of subscriptions to IPA may also be claimed.
Consequently, if UK tax is being deducted under PAYE, it should be possible to claim a tax refund at the end of the tax year. Meanwhile, it may be possible to arrange to be included on your employer's list of non-resident aircrew supplied to HMRC under a section 690 claim. This is a provisional arrangement so that only 10% of your earnings are taxed through the payroll under PAYE, on the understanding that you file a self-assessment tax return with HMRC at the end of the tax year, after making an annual duty flight calculation to reconcile the figures.