Tax for Brits Working Abroad

Summary: We receive many questions about tax for Brits working abroad in particular, and this article is a general guide to the basic facts about income tax and working abroad that expatriates need to be aware of.

Unfortunately the question of how much tax to pay and who to pay it to is one that we have to face when planning on moving abroad to work!

We receive many questions about tax for Brits working abroad in particular, and this article is a general guide to the basic facts about income tax and working abroad that expatriates need to be aware of.

Before we begin, we must point out that we’re not taxation experts and anyone concerned about their tax status or requiring information and advice about their specific set of circumstances would do well to visit the HM Revenue and Customs website or speak to an accountant or financial adviser.  Getting it wrong when it comes to tax can be expensive – so getting it right from the outset is essential.

When going abroad to work an expatriate is likely to either be on a short contract and planning a brief sojourn overseas, or planning an entire new life overseas for at least the foreseeable future.  The length of time someone is planning on remaining outside the UK affects where in the world they are liable to pay tax on income earned.  Basically income tax and where you pay it relates to the country in which you are or are deemed to be resident.

There’s a simple rule in the UK that says if you leave permanently or for at least three years you become non-resident and not liable for UK tax on income earned outside of the UK.  However, there are a few exceptions to this rule…if you decide to come back and visit family or friends on a regular basis you have to keep your visits to under 183 days in one tax year.  Alternatively, if you intend to come back regularly each year you’re abroad you have to keep your visits to under 91 days a year otherwise you could be deemed resident again and once again become liable for UK taxation!

If you’re only going to be working abroad for a short period of time then you will remain liable for UK based taxation on all your income.  If you have a contract overseas it is sometimes possible to have the income paid without the deduction of tax in the country in which you’re living because you will be paying tax on the income in UK.  Some companies, employers and even overseas taxation bodies aren’t so willing to accommodate temporary foreign workers in this way and will insist you pay tax locally in the new overseas country.  If this happens then the affected individual has to keep all proof of tax paid on income earned and present it to the UK tax man to prove that tax has already been paid and is not now due in the UK as well.

This only works for countries with which the UK has a double taxation treaty – but luckily the UK has agreements with over 100 countries and anyone affected by the prospect of paying tax twice can contact the The Centre for Non-Residents that the Inland Revenue runs – and this is the best place to source comprehensive information about all things tax whilst living and working abroad.

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