What Everyone Should Know About Paying Tax When Working Overseas Or For A Non UK Employer

Do you work overseas for a UK employer?  Or do you work for an overseas employer in the UK?

If so, your tax rules and regulations may be more complicated than most people.  In these situations, the tax you will pay depends on where your employer is based, where you work and your residential status in the UK.

Our guide will help you determine what tax you will have to pay, and where.

Resident, ordinarily resident and domiciled

The tax rules are largely dependent on your tax status in the UK.  Most people fall into one of three categories:

  • Resident – You are a ‘resident’ for tax purposes if you are in the UK for more than 183 days in a tax year.  You are also a ‘resident for tax purposes from your date or arrival if you come to live in the UK permanently or you intend to remain for three years or more.  And, you are also treated as a ‘resident’ if you are in the UK for an average of 91 days or more in a tax year (worked out over a maximum of four consecutive tax years)
  • Ordinarily Resident – If you are a ‘resident’ for tax purposes in the UK year after year, you will generally be treated as ‘ordinarily resident’.  If you intend to stay in the UK for more than three years when you arrive, you will normally be treated as ‘ordinarily resident’ from the date of your arrival
  • Domiciled – ‘domicile’ is the most complicated tax status.  Your domicile is normally acquired at birth, but this is a general law concept covering a range of factors

It is possible that more than one of these definitions can apply to you – or even none of them at all.

What happens if you are ‘non resident for tax purposes’?

If you are ‘non resident’ in the UK for tax purposes, you will not pay any UK tax for the work you do overseas.  However, this work may be taxable in another country.

You will have to pay UK tax on any overseas earnings from work you do in the UK.  This will normally be paid via the Pay as You Earn (PAYE) scheme or you may have to complete a self assessment tax return.

What happens if you work entirely outside the UK for a UK employer?

In this situation, if you are ‘resident’ and ‘ordinarily resident’, you will pay tax on all your earnings.  If you are only ‘resident’, you will only pay tax on the earnings that you bring into the UK.

What happens if you work partly in the UK and partly outside the UK for a UK employer?

Here, if you are both ‘resident’ and ‘ordinarily resident’, you will pay tax on all your earnings.  If you are only ‘resident’, you will pay tax on all your earnings for work you do in the UK.  For the work you do overseas, you will only pay tax on the earnings you bring into the UK.

What happens if you work wholly outside the UK for an overseas employer?

Here, if you are ‘resident’ but not ‘domiciled’ you will only pay tax on earnings you bring into the UK.  If you are both ‘resident’ and ‘domiciled you will pay tax on all your earnings if you are ‘ordinarily resident’ but only pay tax on earnings you bring into the UK if you are not ‘ordinarily resident’.

What happens if you work partly in the UK and partly outside the UK for an overseas employer?

In this situation, if you are both ‘resident’ and ‘ordinarily resident’, you will pay UK tax on all your earnings.  If you are just ‘resident’, you will pay tax on all the earnings you receive for work you do in the UK, but only be taxed on earnings you bring into the UK for work you undertake overseas.

15 comments

  1. Bill Cotton says:

    Does a non resident for tax purposes pay tax on earnings paid in the uk ?

  2. Stuart Reynolds says:

    I will be working for a US offshore drilling company, and working out of Angola.

    Still residing in the UK, will I have to pay tax? Or at least get any tax breaks?

  3. marty wilson says:

    Hi iv been working at sea for the past 12 months but some of that has been in uk water but im about to start working for a company that runs an office from Guernsey and will not be spending more than 183 days in the uk
    does this make me tax exempt on my earnings I will be paid in €’s
    but into an English account
    Any help on this matter would be greatly appreciated as it might sway my decision on taking the job
    thanks for your time (anybody)

  4. Dave says:

    I work at sea and I am out of the country for more than 183 days per year am I tax exempt

  5. Neil Llewellyn says:

    I work as a consultant and my income is paid into a UK bank account by a UK registered company. I will have only been in the UK for 70 days total at the end of the current tax year. my assignment is likely to last until the end of 2014-15. However the tax law seems a little ambiguous when it talks about ‘tax on money I bring into the UK’. Am I right to assume that as long as remain non-resident for tax purposes I will not pay tax on any of my actual earnings from my overseas work.

  6. j hanford says:

    I recently did a job as self employed for a company in kuwait, but as it was computer graphics work the work was all done from the uk and emailed to them. How would I put this on my tax return?

  7. tony greig says:

    work for a overseas employer work overseas but stay in uk

  8. Ignacio says:

    Hello,
    I will be working in the UK for ten months, this makes me a resident because I will be more than 183 days in the UK.
    The problem is that my wage will still be pay in mexico (my residence country and the headquarters of the company) My earnings will be from overseas employer.
    Do I have to pay tax? how can I do it?

  9. Alice says:

    I am similar to Sash – I work as a consultant (self employed)and am paid into my UK bank account by a UK registered company. I have only been in the UK for 56 days total in the last 2and a half years, so assume I am non-resident for tax purposes and only have to pay tax on money I bring into the UK. But what does ‘bring into the UK’ mean? Does that mean money that is paid into my Uk bank account? if so that would make me liable to pay tax on all my earning wouldn’t it? Thanks in advance for your help.

  10. Sash says:

    I am a British self-employed worker under an LLP UK company, and will be paid into my uk bank account whilst working privately for a family in Australia on a Working Holiday Visa. Who Do I pay tax to? Do I complete my annual returns in the same way? Will I be required to pay double tax?….Feeling quite lost

    • TaxFix says:

      Sash: It depends where you are a resident for tax purposes. A number of countries have double taxation agreements so that you do not pay tax twice.

  11. Francesca James says:

    I am a UK resident. I paid 29% tax whilst working for 6 months on my working holiday visa in Australia last tax year. Is there anyway of getting money back from this? Many thanks

  12. Tony gardner says:

    I intend to status myself as non-resident to work outside the UK for a year or more.I will correctly observe the required day limits for being out of the country and will inform HMRC of my movements as per their regs. I assume this will make me non resident but ordinarily resident for a period and I will stay UK domiciled. I will be working for a UK employer. Will I need to pay any tax on earnings I bring into the country?

    • TaxFix says:

      Tony gardner: If you are a non resident for tax purposes you will not need to pay tax on any income made outside the UK to HMRC.

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