Paying UK tax if you work overseas

Our experts tell you everything you need to know about paying tax in the UK if you work abroad

If you work overseas, either temporarily or permanently, you are bound to have questions about how you are taxed. Now we at DSR Tax Claims can’t give you any advice about the taxation laws of the country you will be working in but we are experts on UK tax regulations so let us give you the benefit of our expert advice with regard to paying UK tax if you work overseas. If you are still left with questions when you get to the end of our handy guide, give one of our friendly team a call on 0330 122 9972 and we will sort you out.

What happens if you work abroad temporarily

As far as HMRC are concerned, even if you are working overseas temporarily, you are still classed as a UK resident, which means you are probably going to pay UK taxes, especially if you are resident in the UK for more than half of the year. You may be able to gain tax relief on any income which gets ‘double taxed’ – that is taxed by the UK and by the country in which you earned the income. The UK has double taxation agreements with hundreds of countries, though the amount you can claim back depends on the particular agreement with that country.

To be classed as a non-UK resident, in terms of taxable income, you need to meet the following criteria:

  • To be working abroad for at least one full tax year;

  • Spend no more than 182 days in the UK in any one tax year;

  • spend no more than 91 days in the UK on average over a four-year period.

You count as being in the UK for one day if you are here at midnight. HMRC have a form, P85, that needs to be filled in if you are going to be away for over one full tax year – make sure you fill it in in plenty of time before you leave to work overseas. You should fill in HMRC form P85 if you are going to be away for a full tax year. You should also check whether you are entitled to a tax rebate before you go too – give our friendly team a call on 0330 122 9972 and we can sort that for you.

What are the benefits of being classed as a non-UK resident?

If you are classed as a non-UK resident, you will not be expected to pay income tax on any earnings from your overseas work. There are other tax advantages too – you won’t be expected to pay tax on any interest earned on deposits in UK banks, nor any capital gains tax on any purchases made after you leave the UK, nor on items purchased before you left the UK once you have been a non-UK resident for five years. You will still have to pay capital gains tax on any UK property though.

What about National Insurance?

That all depends on how long you are away and who you will be working for. If it is a British company then it is pretty likely that you will still need to pay NI contributions. If it is a foreign employer, you might pay the local equivalent tax instead. You may want to check the double taxation agreements before you set off to see what you might be letting yourself in for. Of course, you can decide to make voluntary NI contributions to ensure you remain entitled to certain UK benefits – that is entirely up to you.

Paying your taxes while working abroad is a complex issue and we hope that we have answered your questions but if you are still unsure where you stand, give us a call on 0330 122 9972 and let our experts help. You might want to check if you are entitled to a rebate before you go – DSR Tax Claims help you get your maximum refund fast!

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