Tax rates and allowances
Working abroad and tax
By Joe Elvin
Article 10 of 10
Working abroad and tax
All you need to know about paying tax when you work overseas - and whether you'll pay UK tax, or tax in the country you live in.
If you work abroad, your earnings may still be taxable in the UK, depending on whether you’re still classed as a UK resident for tax purposes.
If you're no longer classed as a UK resident, you don't have to pay UK tax.
If you are considered a UK resident, you will need to declare income on a UK self-assessment tax return.
- You can get a head start on your 2016-17 tax return with the Which? tax calculator. Tot up your tax bill, get tips on where to save and submit your return direct to HMRC with Which?.
Tax exemption and UK residency
In order to be classed as a non-resident and exempt from UK tax, you will need to:
- work abroad for at least one full tax year
- spend no more than 182 days in the UK in any tax year
- spend no more than 91 days in the UK on average over a four-year period.
- For this purpose, you count as being in the UK on any day when you're here at midnight.
Any days spent in the UK because of exceptional circumstances beyond your control (such as illness or flight delays) are not normally counted for this purpose.
Find out more: retiring abroad - how it will affect your finances
Working abroad - tax advantages
If you're classed as a non-resident in the UK, you won’t have to pay income tax to HMRC, although you may have to pay tax in the country you're working in instead.
You also won't be subject to capital gains tax (CGT) on items purchased after you've left the UK.
If you bought an item before you left the UK, you stop being liable for capital gains tax once you’ve been a non-resident for five years. So, it might be a good idea not to dispose of anything that you might be liable for CGT on until this five year period is up.
You will, however, pay capital gains tax on UK property regardless of whether you’re a UK resident.
Find out more: CGT rates and allowances and what items you might be liable for CGT on
Double taxation agreements
If you're taxed on your overseas income both in the UK and in the country where income was earned, you can usually claim tax relief to ensure you're not taxed on the same income twice.
How much tax you’ll get back, and how to claim it, depends on the double taxation agreement between the UK and your country of residence.
The UK has a double taxation agreement with hundreds of other countries.
This guide on gov.uk explains which countries are included and what form to use to claim tax relief back.
For most double taxation agreements, you will need to use form DT-individual, available on gov.uk, to get tax relief in the UK.
Double taxation agreements can be quite complicated. Our Which? Money Helpline experts can give you independent one-to-one guidance on all kinds of tax queries.
If you're not a Which? member and you'd like to get unlimited access to the helpline, you can try Which? Money for two months for £1.
National Insurance contributions and working abroad
If you’re working abroad and plan to return to the UK at some point, you may choose to make voluntary National Insurance payments in the UK so you remain entitled to the associated benefits, such as the state pension.
Find out more: National insurance and your state pension - more information on top-ups
- Last updated: July 2017
- Updated by: Gareth Shaw