Working Abroad and Taxation

Summary: If you leave the UK to work abroad full time you will drop your UK residence and UK ordinary residence status for tax purposes if you fulfil the following criteria...

Capital Gains Tax

UK capital gains tax will not apply to any gains arising from either UK held assets or overseas owned assets which are owned at the date of an individual’s departure from the UK.  This CGT exception applies so long as the individual in question satisfies the above detailed criteria for dropping UK residence and ordinary residence status. 

Furthermore, for this UK CGT exemption to be applicable the individual in question has to be non resident during the tax year of asset disposal and remain non resident for a further five full tax years.

Any gains made on assets purchased by a non UK resident, UK domiciled individual after they have become non UK resident are completely exempt from UK capital gains taxes...even if the assets purchased were actually purchased in the UK.

Expenses

Travel expenses are allowable as a tax deductible expense for a UK resident/UK ordinary resident if all work duties they perform are performed abroad.

The cost of travelling to and from their place of work in relation to their home in the UK can be fully tax deductible.  If however the travel undertaken is only partly for work purposes then only the relevant part of the expense can be deductible of course.

If an employer pays for the living expenses of the individual while he is working abroad, this ‘benefit’ does not spark a tax liability for the employee. 

Furthermore, if an employer pays for the employee’s spouse and/or children to visit if the employee has been working overseas for a continuous period of 60+ days, then this ‘benefit’ is also not taxable for the employee.

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