Tax when leaving the UK

Thousands of people leave the UK every month to live or work abroad.  In 2010, BBC’s Newsnight reported that a staggering 450,000 emigrate from the UK each year to set up a new life overseas.

If you are planning to work or live abroad, you may well become a ‘non-resident’ in the UK.  This means that you may stop paying UK income tax on your earnings, although you may continue to have a tax liability if you continue to receive any income in the UK.

Our guide looks at how your tax is affected when you leave the UK.

When do you become ‘non resident’ for UK income tax?

You will be treated as a ‘non resident’ for tax purposes from the day after you leave the UK.  However, you must demonstrate that:

  • You left the UK permanently or for at least the entire tax year
  • Your visits to the UK are less than 183 days in a tax year and average below 91 days over a maximum of four consecutive years

What you have to do when you leave the UK

If you are emigrating or planning to leave the UK you must inform HM Revenue and Customs (HMRC).  If you are not required to complete a tax return you will be obliged to complete the form P85 Leaving the UK – Getting Your Tax Right.  You will also have to enclose parts 2 and 3 of your P45 if you have one.

HMRC will consider the information on this form and will work out if you will become non-resident.  They will also send you any tax rebate that you are owed.

What if part of your work is in the UK?

You may move abroad but part of your work remains in the UK.  In this case, you will continue to pay UK income tax on your earnings from the work you do in this country.  This is normally done by allocating your earnings based on the number of days you work in the UK and the number of days you work overseas.

What if you have other UK based income?

Even if your work is outside the UK, you may continue to earn money in the UK through savings, pensions or property.  In these scenarios, you may still have to pay some UK income tax.

For example, if you are ‘non resident’ you will still pay tax on your savings interest.  UK tax will also be due on income from a rental property and on your UK pensions.

If you have any other questions, watch the short explainer video below or alternatively ask a question in the comments and we’ll personally answer it:

 

 

6 comments

  1. Kim says:

    I’m a UK citizen that moved to Melbourne in May 2010 on a temporary business visa. I’m employed by an Australian company & paid PAYE here and am taxed at source like an Australian resident. As my UK property is rented out I’ve been informed by the HMRC that I need to complete a 2010-2011 self assessment. I’ve registered online with HMRC to file my return online, but have now discovered that I have to buy commercial software to complete this return, as a non-resident/non-domicile of the UK. Please can you tell me why I need to purchase the commercial software, when I can assess the HMRC online site with no issues?

  2. Samy says:

    I have lived in UK from January 1st 2011 to Sep 7th 2011 and moved abroad. I worked for a company from April 4th 2011 to September 2nd 2011 in UK. Can I claim full tax refund and National Insurance?

  3. Eve says:

    I worked for one company for over 3 years and left UK for good, years I was working for this company 2007 September – 2010 November. I got my tax back only for 2010-11.Can I claim my tax back from 2007, 2008, 2009? Thank you for your help. Kind Regards Eve

    • TaxFix says:

      Eve: It depends if you have overpaid tax in those years. Most people that leave the UK are due a tax refund in the year that they leave the UK, as they have not worked a full tax year and do not receive their full tax free allowance.

  4. Ross says:

    I was in the British Army working in Germany for 7 years, paid all UK taxes, I then left the Army in Oct 2010 and came to Australia on a working holiday visa for 1 year where I didn’t pay UK tax but did pay Australian Tax, I plant to return for 3 weeks in September before leaving permanently as far as Tax is concerned, I have now been granted permanent residency in Australia so will be leaving the UK for good. Am I entitled to a tax refund?

    Thanks

  5. Elaine Ballard says:

    Do you still qualify for a tax allowance when you emigrate, or do you have to pay tax on all interest and private pension

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