Are you going to live or work abroad?
If so, you’ll need to know what tax you will continue to pay in the UK. Our guide looks at when you do and don’t have to pay UK income tax when you move abroad.
Becoming non-resident for tax purposes
You’ll be treated as a non-resident from the day after you leave the UK if:
- You can show that your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years
- You can show that you left the UK to go abroad permanently or your absence and full-time work abroad lasts at least the whole tax year
If you’re leaving the UK you must tell HM Revenue & Customs (HMRC). Your Tax Office will give you a P85 form (‘Leaving the United Kingdom’) in order that you can claim any tax refund that you’re owed. HMRC will also work out if you’ll become non-resident. If you still need to complete a tax return after you leave the UK, they’ll let you know.
Paying tax on your employment income
If you become non-resident, you won’t pay UK income tax on your earnings from working overseas.
However, if you’re non-resident but part of your work is in the UK, you’ll pay UK tax on the part of your earnings allocated to that work. You usually allocate your earnings by looking at the number of days you work in the UK and the number of days you work abroad.
There are special rules for certain professions including seafarers, entertainers, students, Crown employees, oil workers and sports people.
Paying tax on other sources of income
If you’re non-resident, you’ll pay UK tax on your UK pensions including your State Pension.
However, you may not pay UK tax if the country you live in has a ‘double taxation’ agreement with the UK. If you are a resident of a country with which the UK has a double taxation agreement, you may be able to claim exemption or partial relief from UK tax on certain types of UK income, such as pensions.
If you’re non-resident and rent from UK property is paid directly to you, your tenant must deduct UK tax at the basic rate (currently 20 per cent). If you use a letting agent, they’ll deduct the tax from the rent after any allowable expenses have been paid.
You can apply to have the rent paid to you without tax deducted if you don’t think you’ll have to pay any UK tax, although you’ll still need to declare the rent on a Self Assessment tax return if you’re required to complete one.
If the country you live in has a double taxation agreement with the UK you may be able to get relief there for any tax paid in the UK.
With regards to bank and building society interest in the UK, if you’re non-resident, the only UK tax you’ll usually pay is the tax deducted before you get the interest. If you’re also ‘not ordinarily resident’ (i.e. you normally live outside the UK), you can get your interest without any tax being deducted by completing the R105 form and giving this to your bank or building society.
If tax has been deducted from your savings interest, you may be able to claim a refund by using the R43 form.
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: