Introduction

Living in Kenya but being employed by a UK-based employer can lead to confusion regarding taxation, especially if you notice deductions for UK tax on your payslip. This article is meant to explain the situation, explain your rights under international tax laws, and offer guidance on handling this issue.

Primary Taxation Location

Since you are a resident of Kenya and perform your work entirely within the country, your income is subject to Kenyan tax law. As per the principles of international taxation, individuals are typically taxed in the country where they reside and perform their duties. Therefore, the income you earn from your UK employer should primarily be taxed in Kenya, not the UK. This applies although your employer is based in the United Kingdom.

UK Tax Implications

As a non-UK resident, your income should not generally be subject to UK tax, as your work is conducted outside the UK. However, due to the Double Taxation Agreement (DTA) between Kenya and the United Kingdom, you have the option to claim relief or a refund for any UK taxes that have been wrongly deducted. This DTA ensures that individuals do not end up paying taxes on the same income in two different countries.

Kenyan Tax Responsibilities

As a Kenyan tax resident, you must declare and pay tax on your worldwide income, including any income earned from your UK employer. Kenyan tax laws stipulate that residents are liable for taxes on income earned both locally and internationally, which means your UK income will be taxed in Kenya.

When reporting your income, it’s essential to ensure that all earnings, including those from foreign employers, are declared on your Kenyan tax return. The Kenyan Revenue Authority (KRA) will expect you to comply with these reporting requirements to avoid any penalties for non-compliance.

Claiming Tax Relief

If your UK employer has deducted tax from your income, you can claim relief to avoid being taxed twice on the same earnings, in line with the provisions of the Kenya-UK Double Taxation Agreement. There are two key ways to claim relief:

• Claiming a Credit for UK Taxes Paid: In some instances, you may be able to claim a tax credit in Kenya for the amount of tax paid to the UK. This means that any UK tax paid will be credited against your Kenyan tax liability, ensuring that you are not taxed on the same income twice.
• Applying for a Refund from HMRC: If UK tax has been wrongly deducted under the PAYE system, you can apply to the UK’s tax authority, HMRC (Her Majesty’s Revenue and Customs), for a refund. This process involves providing evidence that you are a Kenyan resident and that the income should be taxed in Kenya under the terms of the Double Taxation Agreement.ax Relief

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