Worried about tax on your UK income if you live abroad? You’ve found the essential guide to the most important things you need to know about UK tax while you’re a non-resident. Hopefully, we managed to translate the tax talk enough for you to follow. If you’re not up for the challenge you can always bookmark this page and come back later. Getting back to it, read on to enjoy your first insight into the future of your UK taxes.
Table of Contents
Becoming a non-resident for the first time
Essential things to know before you emigrate and become a resident overseas. We all need a little peace of mind so you’re doing the right thing researching your tax affairs before you leave the country. Depending on your personal status, commitments, and investments your tax status as a non-resident will change. This article is set out as a kick-starter checklist for students, young professionals, families, and those who are migrating for work.
If you’re leaving the UK to become a resident overseas for work or if you’re starting a new overseas venture then you’ll be changing your tax status to a non-resident.
UK residence and tax
When you leave the UK, your resident status changes as you will now be required to pay tax as a resident in the country that you have moved to.
What happens if you still have an income?
Different countries have various treaties with the UK and if you are still earning a living through a rental property or business, you will still need to pay or file a tax refund, however, the amount of tax that you pay may be lower or you may not have to pay any tax at all.
What happens if you don’t have any income or assets in the UK?
If you do not have any income in the UK and you become a resident in another country your UK residence status will change for tax purposes.
This will determine whether you need to pay tax in the UK on your foreign income.
“Non-residents only pay tax on their UK income – they do not pay UK tax on their foreign income.
Residents normally pay UK tax on all their income, whether it’s from the UK or abroad. But there are special rules for UK residents whose permanent home (‘domicile’) is abroad.” States HMRC
When should you notify HMRC of your income?
If you’re now a resident of another country you may still be required to submit a self-assessment tax return to declare your earnings. If any of these points apply to you, then you contact an expat tax specialist like us. One of our team will be able to talk you through the process.
Find out more about expat tax or talk to our accountants in London.
If any of these points apply to you, please give us a call or send us a message and we’ll be able to help set up your tax affairs.
- Own/or rent out a property in the UK
- Have other untaxed income
- Self-employed or work for yourself in the UK
- Have any other untaxed income
File a self-assessment tax return 
Understanding your new residency status
Determining your UK Resident status is decided by the number of days you are on UK soil within each financial tax year, which is the 6th of April to the 5th of April the following year.
You are a UK resident if any of the below apply to you.
- Spend 183 days or more in the UK within the tax year
- If you’re only home was the UK and you have rented, owned, or lived in for a minimum of 90 days in total
- You must have spent at least 30 days in the UK
You are classed as a non-resident if you
- Spend less than 16 days in the UK or you can stay for 46 days if you have been a non-resident for the three previous tax years.
- If you work overseas full-time on an average of 35 hours per week.
- The maximum time you can spend in the UK is 90 days “of which you didn’t work more than 30 days.
Find out more about Self Assessment Tax Refunds
Getting Taxed Twice & Double Taxation Agreements
When you become a non-resident and migrate overseas you may find yourself in a situation where you are getting taxed twice. There are some countries that have a double tax agreement with the UK. You may be able to apply for full relief or partial relief before you are taxed and you may be able to claim a tax refund.
Double taxation agreements set out the country where you pay tax. A country that you apply for relief while living there. And how to max tax relief you claim from the state.
Trying to understand paying tax in two countries is pretty daunting so unless you have some experience, it is a good idea to consult a professional expat tax account. When you pay tax in two countries and the rates differ, you can end up paying a higher rate of tax.
If the tax rates in the 2 countries are different, you’ll pay the higher rate of tax. The tax year may start on different days in different countries.
Different countries have different agreements so you should always consult a professional migration agent before making any decisions.
If you are not a UK resident, you will still be allowed to step on UK soil, and of course, you will still be a British citizen and hold all your usual rights. To help you make a sound decision, you should understand the importance of establishing residency abroad.
Talk to a migration agent
Before you migrate you should also consider talking to a professional migration agent. We’ve listed a few of our industry friends’ websites which you can use to source more advice and tips for your upcoming adventures.
Overseas Emigration
Website: overseas-emigration.co.uk
Email: enquiries@my-oe.com
Call: 0800 193 6900
Overseas / Mobiles: +44 (0) 131 625 6900
Downunder Centre
Website: www.downundercentre.com
UK Office: +44 (0) 203 376 1555
Australia Office (Western Australia): +61 452 431 892
Email: info@downundercentre.com
Leaving the UK soon? Find out how much tax back you could be owed
Find out how much tax you’re owed with our UK tax refund calculator
Non-Resident Tax
Inheritance Tax (UK IHT)
A non-UK domicile will keep you. If you can prove that you no longer have connections, he can no longer charge you with 50% tax on your world income.
If your country of choice happens to have lower taxes than the UK, you hit the jackpot. The only time you are liable for a UK IHT is if you own a property in the UK.
Since part of showing commitment to your new country is to dispose of your family home, and sever all business and social ties in the UK, you won’t have to deal with UK IHT either.
You, Will, Find Various Opportunities
Whether you intend to work or start a business, establishing residency gives you access to plenty of opportunities and advantages. You won’t have a problem owning a property, for example, since you’re no longer considered an alien.
Since most foreign countries have strict rules on foreign property ownership, being a permanent resident frees you from such restrictions. Whatever the locals enjoy, you will enjoy too.
Transfer of Trust
Once you drop your UK domicile you can easily transfer assets into trusts without incurring a 20% chargeable transfer. If you still have properties in the UK, you can just convert them into non-UK assets and then set up a trust where you can transfer such assets.
Establishing residency in a new country will change your life forever because you need to embrace your new domicile and renounce the original one.
This also involves a lot of work since you need to change a lot of things, from your driving license to your gym membership club. Suffice to say that before you can officially call yourself a local, you have plenty of legwork to do and documents to comply with.
Where tax is concerned, however, you can rely on a company that provides tax return services for a broad demographic. Since your case is different now than when you were a UK resident, it makes sense to work with a firm like us that specialises in expat tax.
Photo by Marcin Nowak on Unsplash