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Earning lots and living abroad? I need tax help!

  • 3 min read
  • 9 Aug 2022
How to pay taxes if you're earning lots and living abroad

Are you a high earner and living abroad? If you’re struggling to wrap your head around UK tax and what it means for you now that you live overseas, then don’t worry! Sorting your taxes isn’t anywhere near as complicated as moving countries (phew!).

In the blog below we’ll answer all those burning questions you have about earning lots and living abroad. 

Let’s dive in!

Do I pay taxes in the UK if I live abroad?

Most likely yes. 

The basic rule is that when you live abroad, you still have to pay income tax on any income that you earn from the UK. This includes things like:

Will I get a personal allowance?

The Personal Allowance is the amount of tax-free income that everyone in the UK is entitled to receive each year – the current amount for this tax year is £12,570. So even if you live abroad, you’ll only pay tax on your UK income above that threshold. 

However…

If you earn over £100,000 per year from your UK income, your Personal Allowance is reduced by £1 for every £2 over £100,000. Once your income reaches £125,000, your Personal Allowance goes to £0. 

That means if you live abroad and earn over £125k, you’ll be taxed on all your income.

The country I live in already taxes me on my UK income – why am I being taxed twice?

In some circumstances, people living abroad have found that they get taxed twice on the same income.

Why is that?

It could be that the country you live in doesn’t have a double-taxation agreement (DTA) with the UK, which is why you’ll be paying tax there and in the UK.

Double Taxation Agreement - Taxscouts

A double-taxation agreement explained

A double taxation agreement is an agreement between two countries. It prevents you from paying tax twice on the same income. With a DTA, you can claim tax relief in the UK so you don’t end up getting taxed twice. 

You can check the government website to see whether the country you live in has one with the UK.

I rent out property in the UK – is that taxed too?

Yup!

You’ll have to pay income tax on your UK rental income even if you live abroad.

AND you might also have to pay Capital Gains Tax (CGT) if you make a gain when you sell your UK property or land.

You pay both of these either via Self Assessment or through the Non-resident Landlord (NRL) scheme. This is a government scheme that lets landlords (who are residents outside the UK for more than 6 months) have their tax deducted by their letting agent or tenant.

How do I report my income to HMRC if I live abroad?

First things first, to report your income you’ll need to fill out and send a Self Assessment tax return each year. This also means you’ll need to register for Self Assessment.

Unlike those who live in the UK, you can’t directly use HMRC’s online services to file your tax return if you live abroad. Instead, you have to file either by:

  • Using a certain type of HMRC-certified online software
  • Filling out two paper forms (SA109 and SA100) and submitting them by post
  • Using a qualified accountant or an online tax service (like TaxScouts!)

High earner tax advice from TaxScouts!

Paying UK tax as a high earner might sound pretty confusing – especially if you’re living abroad – but it doesn’t have to be complicated at all! If you have a tax-based problem, get in touch with us for some simple, one-off tax advice from our accredited accountants. Learn more here.

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