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Living abroad and UK tax

  • 3 min read
  • 10 Oct 2022
Everything you need to know about living abroad and UK tax - TaxScouts

Are you living abroad but have a business in the UK? Or perhaps you live abroad and have rental properties in the UK? Either way, we’re dishing out everything you need to know about living abroad and UK tax!

Firstly, do I have to pay UK tax if I live abroad?

Well, this depends. If you earn any income in the UK, then yes, you will most likely have to pay income tax. This could be from:

  • A business
  • Rental property
  • Pension
  • Savings

Even if you live abroad, you may still be entitled to a personal allowance of £12,570 per year. Depending on your circumstances, you may still have to pay National Insurance.

Will I have to pay tax on UK income in the country I live in, too?

Each country has different rules when it comes to tax. This means you may well find yourself paying tax in both the UK and the country you live in. 

That is unless the country you live in has a Double-Taxation Agreement (DTA) with the UK. 

A DTA is a rather convenient treaty for anyone who doesn’t particularly feel like dividing up their earnings to share out between two tax authorities. It enables you to apply for either:

  • A full tax relief
  • A partial tax relief
  • A tax refund if you’ve already paid double tax

Each agreement with each country differs so be sure to check the full list here!

How do I pay tax in the UK if I live abroad?

If you live abroad and have to pay tax in the UK, luckily, you don’t have to book a flight to London every time tax is due! Instead, you’ll have to submit a Self Assessment tax return and SA109 form by post.

Unfortunately, you won’t be able to use the HMRC online services. It isn’t all bad though, because you will still be able to use a professional service such as TaxScouts to file your tax return if you’re stuck! 🙌

For an even more detailed breakdown of how to pay UK taxes when you live abroad, you’ll want to read our guide on this!

What’s the difference between a UK resident and a non-UK resident living abroad?

For tax purposes, it might help to understand the difference between a UK resident and non-UK resident living outside the UK. 

But first of all, to be considered a UK resident, you have to:

  • Live in the UK for at least 183 days during a tax year
  • Own property in the UK which you live in for 91 consecutive days, 30 of which need to be during the tax year (extremely precise, we know!)
  • Have your main job in the UK and work for at least 274 days during the tax year 

Now, the main difference (in tax terms) is:

  • A non-UK resident living abroad will only pay tax on their UK income
  • A UK resident who doesn’t live in the UK will pay tax on all of their income, even if it’s not from the UK

Perhaps a quick example will help break it down for you:

Ben lives in Switzerland, and works as a full-time professional chef. He has a rental property in London which brings in extra money. His best mate Eleanor also works in Switzerland and also has a rental property in London (BFF goals! 👯).

Ben pays UK tax on just the rental property, whilst Eleanor pays UK tax on her wages as well as her rental property income. They are both exempt from double taxation.

But they’re exactly the same?! 😕 Well actually, there’s just one small (or massive) difference..

  • Ben is a non-UK resident
  • Eleanor is a UK resident (this is because she spends 183 days in a tax year in the UK)

Also, the UK has a double taxation agreement with Switzerland – hence the tax exemption!

It’s worth noting that if you’re not a UK resident and you live abroad, you also won’t usually have to pay inheritance tax or capital gains tax.

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