If you go to live or work abroad and become non-resident in the UK, you might still have to pay UK Income Tax – but only on your income from the UK. If you do need to pay, you may need to complete a Self Assessment tax return.
When are you non-resident for UK Income Tax?
You’ll be treated as non-resident from the day after you leave the UK if you can show:
- You left the UK to go abroad permanently or your absence and full-time work abroad lasts at least the whole tax year
- Your visits to the UK are less than 183 days in a tax year and average less than 91 days a tax year over a maximum of four consecutive years
The same applies to your spouse, civil partner or partner.
Contacting your Tax Office when you leave the UK
If you’re leaving the UK you must tell HM Revenue & Customs (HMRC). Your Tax Office will give you form P85 ‘Leaving the United Kingdom’ to get any tax refund you’re owed and work out if you’ll become non-resident. If you still need to complete a tax return after you leave they will let you know.
Income from overseas employment
If you become non-resident, you won’t pay UK tax on your income from working overseas.
Working partly in UK
If you’re non-resident but work partly in the UK, you’ll pay UK tax on the part of your earnings allocated to that work. You usually allocate your earnings by looking at the number of days you work in the UK and the number of days you work abroad.
Special rules for certain employees
There are special rules for:
- Crown employees
- Seafarers
- Oil and gas workers
- Entertainers and sports people
- Students
Check with your Tax Office if you’re one of these.
Tax on UK pensions
If you’re non-resident, you’ll pay UK tax on your UK pensions – including your State Pension. You may not pay UK tax if the country you live in has a double taxation agreement with the UK.
Tax on UK government service and local authority pensions
Wherever you live, you’ll usually pay UK tax on a government service or local authority pension. But if you live in Australia, Canada, New Zealand or Cyprus you’ll pay tax on it there.
Tax on UK bank and building society interest
If you’re non-resident, the only UK tax you’ll usually pay is the tax deducted before you get the interest.
If you’re also ‘not ordinarily resident’ (you normally live outside the UK), you can get your interest without tax deducted by giving form R105 to your bank or building society.
In either case, if tax has been deducted from interest, you might be able to claim a refund against UK tax allowances using form R43.
Tax on UK investment income (except rental income)
If you’re non-resident, UK tax is still due on your other UK investment income. However, if the country you live in has a double taxation agreement with the UK you may be able to get relief or exemption. But you can never reclaim or reduce the ten per cent tax credit on dividends from UK companies.
Tax on UK rental income
UK tax is due on your income from rental property.
If you’re non-resident and you get rent from UK property paid directly to you, your tenant must deduct UK tax at the basic rate – currently 20 per cent. If you use a letting agent, they’ll deduct the tax from the ‘net rent’ -after any allowable expenses they’ve paid.
You can apply to have the rent paid to you without tax deducted if you don’t think you’ll have to pay any UK tax, or if your tax affairs are up to date. But you’ll still need to declare the rent on a Self Assessment tax return if HMRC sends you one.
If the country you live in has a double taxation agreement with the UK you may be able to get relief there for UK tax paid.
UK tax on overseas income
If you’re non-resident and get overseas income, no UK tax is due. But if it’s paid or collected by a UK agent – like a bank – they normally deduct tax at source. You’ll need to complete form PA1 or CA1 – available from your agent – to prevent this.
If you’re normally taxed on income brought into the UK – remittance basis
In the tax year when you leave the UK you’ll pay UK tax on the smaller of:
- What you brought into the UK before you left
- The same proportion of the whole year’s income (received in the UK) as the proportion of the year you were in the UK
Tax-free allowances for non-residents
If you’re a Commonwealth citizen (including British), European Economic Area (EEA) citizen, or a current or former Crown employee, you’ll still get your tax-free allowances to reduce the amount of UK Income Tax due. Members of certain other special groups also qualify.
Double taxation relief
The country you move to may want to tax you on your worldwide income – even if tax is due in the UK. But if it has a double taxation agreement with the UK you won’t normally have to pay the same tax twice.