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Unless you're moving overseas more or less permanently, you'll probably still be paying some UK tax. Even if you're not coming back, any income you have here (bank interest, for example) will still be taxed. There are specific regulations for National insurance contributions, but there are also rules to help prevent "double taxation”. We’ve highlighted what you need to know below.
Working or living abroad for a while doesn't stop you from being a "UK resident" in the eyes of HMRC. The taxman has some tests he applies to see if you still pay UK taxes. There are various criteria for this, but time spent here is a major factor. For instance, if you're in the UK for more than half the year, chances are you're a UK resident.
One smart thing to do before you leave is check if you're owed a tax rebate from HMRC. If you're leaving part-way through a tax year, you may not have used up all of your tax-free personal allowance. If you're registered for self assessment tax returns, don't forget to file one as normal after the end of the tax year. We've got all the information you need on tax codes and any potential changes that may occur.
HMRC has a special form for people who are going to be away from the UK for a complete tax year. Visit their site for form P85 "Leaving the UK - getting your tax right" in good time before you leave.
If you won't be away that long, there are agreements in place to make getting taxed in two countries less painful. It's worth checking the HMRC site to see what you're letting yourself in for, and how to make the best of it.
Depending on how long you'll be away and who you'll be working for, it's certainly possible. If your overseas employer is a British company, then you'll probably keep paying National Insurance as normal. If it's a foreign employer, you may find yourself paying the local equivalent tax instead. Again, you should check the double taxation agreements to see what to expect.
While you're working away from the UK, HMRC washes its hands of your student loan repayments. Let the Student Loan Company know if you'll be away for over 3 months. They'll make the necessary arrangements with you. Similarly, let them know when you're back, so you don't end up paying twice.
There are three basic tests that HMRC uses to decide whether you're a UK resident or not:
If you're traveling back and forth a lot, any time you spend in the UK will be taken into account. All the taxman wants is a full picture of how long you're here during the tax year. Remember to keep track of that - especially if the amount of time varies from year to year. HMRC will check up on you each year, and the decision they made in one year may affect the next.
You need to take the residency tests each year, whatever happens. Even quite minor differences in the time you're spending abroad can change the overall picture. That's not the only thing that matters, either. For example, your residency status could be affected if:
Firstly, you should be keeping notes on where you've been - ideally on a day-by-day basis. That way, you'll have a much clearer idea where you stand. The last thing you want is to get caught off-guard when your residency status changes.
Other things to keep track of include the hours of work you do in the UK and what travelling you're doing while you're here.
Just like anyone else, you're entitled to an Armed Forces UK tax refund for travel expenses to and from temporary workplaces. If you're making your own way from a UK residence, you could have a pretty big refund on your hands. Watch out, though - if your family has moved abroad with you, then your main residence might be outside the UK. In that case, you can't claim for your travel costs.
Whatever side of the channel you're working on, we can keep on the right side of HMRC. We can even put money back in your pocket while we do it! Get in touch to find out more.
18th November 2024
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