Hypo Tax

[sleepyrascal]

Hello all,

I wondered if anyone on here would be able to give me any help with a claim for HYPO tax being made my my employer.

I worked abroad in a non-taxable location and was a fully non UK tax payer for several years. I moved from that location to another location, again not in the UK so I retained my non-uk resident status. My accountant has confirmed this following the residence test etc.

I was employed by a division of my company registered in Singapore.

for the record, I understand the principle of hypo tax, and I understand why it can be a benefit. However, I was forced to accept the hypo tax charge (approx 28% of my earnings) despite being fully non uk resident. The Hypo tax is non returnable and, over the course of the 11 months I spent in that particular role, I paid just under £25,000 of hypo tax. I've accepted I will not be able to recover this.

However, my compnay are now saying they want a further £6500 as they had applied a 'hypothetical personal allowance' to my hypo tax. I then enjoyed my full UK personal allowance when I returned to the UK mid tax year. The company argues that I had two personal allowances and I therefore benefited.

However, I purposefully stayed out of the UK for the duration of that employment to retain my non uk status. I had no access to NHS. My UK based life insurance was void as a result. I made those sacrifices to retian my non uk status. However, now the company are looking to exploit my sacrifice.

Had i returned and overstayed din the UK during my overseas work, the HMRC would be requesting the money. I see this as my company exploiting my sacrifice. They have already profited from the £25,000 i paid to them in hypo already.

I find this unfair, but they are insisting i pay it. They have also said they will simply deduct it from my salary which i simply cannot afford. My wife lost her job due to covid just at the point we had agreed to move house which was hugely expensive. We also lost money paid to a child minding service.

Is there any guidance around hypo tax?

[ULA]

Firstly just so you are aware I have very limited experience on hypo tax specifically but my understanding is that a the end of the tax year, a reconciliation is carried out comparing the precise amount of tax the employee would have paid had they stayed at home with the hypotax collected. The difference is then recovered from or refunded to the employee as appropriate. However I accept your company's policy or particular circumstance may be different.

Have you spoken to an accountant or HMRC about this further £6,500?

Onto your question about deducting from salary, I need to direct you to your contract of employment but maybe more specifically any agreement you signed prior to working abroad on assignment or any policy your company has in regard to working abroad and consequential tax-equalisation policies. If any of these cover the right to deduct from salary for the particular situation they requiring to make the deduction then potentially they can do this. If there is nothing agreed or in a policy then potentially it would be an unlawful deduction of salary or it would be in a "normal, non hypo tax" situation.

Not sure if this has been of any help but happy to try and answer any other questions you may have.