Are you planning to live and work abroad?

If so, you may still have to pay some tax on any income you continue to receive from the UK.  The rules on paying tax when you are non-resident in the UK can be complicated, so here are the top ten things you should know about paying income tax when you are leaving the UK.

Becoming non-resident for UK tax

When you leave the UK to live and work you will be non-resident from the day after your departure if:

• You have left the UK to move overseas permanently or your work abroad lasts at least the whole tax year
• Your visits to the UK are less than 183 days in any tax year (and average under 91 days a tax year over a maximum of four consecutive years)

The same rules apply to your spouse, civil partner or partner.

Non UK Resident? Claim Your Tax Back

You should contact your tax office when you leave

If you are leaving the UK you have to tell HM Revenue & Customs (HMRC).  Your Tax Office will give you the form P85 ‘Leaving the United Kingdom’ which you should complete and return.  HMRC will then work out if you will be non-resident and will also calculate any tax rebate that you are owned.

If you have to complete a tax return after you leave the UK, your Tax Office will also let you know.

Paying tax on your income from working overseas

If you become non-resident (as above), you won’t pay any UK tax on the income you earn from your overseas work.

Paying tax on income from working partly in the UK

Even if you are non-resident, you may still work partly in the UK.  In this situation you will pay UK tax on the part of your earnings allocated to that work.

Paying tax on UK bank and building society interest

If you are non-resident, the only UK tax you will usually pay is the tax that is deducted before you get the interest.

If you are also ‘not ordinarily resident’ (i.e. you normally live outside the UK), you can register to receive your interest gross (without tax deducted) by completing and providing a form R105 to your bank or building society.

Double Taxation agreements

If you have income from a source in one country and are resident in another, you may find yourself in a situation where you are liable to pay tax in both countries under their tax laws. To avoid ‘double taxation’ in this situation, the UK has negotiated Double Taxation (DT) treaties with more than 100 other countries.

If you are a resident of a country with which the UK has negotiated a double taxation treaty, you may be able to claim relief or exemption from UK tax on certain types of income from UK sources.

Paying tax on your UK pension

If you are non-resident, you will pay UK tax on your UK pensions – including your State Pension.  However, if the country you live in has a ‘double taxation’ agreement with the UK (as above), you may not have to pay any tax.

Paying tax on UK rental income

You are liable to pay UK tax on income from any UK rental property.

If you are non-resident and your rent from your UK property is paid directly to you, your tenant must deduct UK tax at the basic rate. If you let your property through a letting agent, they will deduct the tax from the ‘net rent’ -after any allowable expenses they have paid.

If you don’t believe you have to pay any UK tax, you can apply to have your rental income paid without tax deducted.

Paying UK tax for certain specialist professions

There are a number of jobs which have specific rules.  If you work in one of the following professions you should speak to your Tax Office regarding the rules that govern what UK tax you should pay:

• Seafarers
• Oil and gas workers
• Students
• Entertainers
• Sports people

Paying UK tax on overseas income

If you are non-resident and receive income from overseas, no UK tax is due.  However, if it is paid or collected by a UK agent (e.g. a bank) they will ordinarily deduct tax at source.  To prevent this, you will have to complete a form – a PA1 or a CA1.

Non UK Resident? Claim Your Tax Back

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