Expat UK residency rules
When you move to another country you usually change your residence status and generally lessen or eliminate the burden of taxation.
If you live abroad or are planning to move abroad, you must inform HMRC if you’re either:
- leaving the UK to live abroad permanently
- going to work abroad full-time for at least one full tax year
The tax year runs from the 6th of April to the 5th of April the following year.
Your UK residence status affects whether you need to pay tax in the UK on your foreign income. The UK pays tax on its income from Brits living overseas.
As a UK citizen living abroad, you will still have to pay tax on your UK based:
- Interest accrued on savings
- Rental income
When is someone considered resident in the UK?
Non UK residents will only pay income tax if they receive income in the UK.
UK residents pay income tax on both UK income and income they receive from abroad.
There are exceptions for UK residents whose permanent home is abroad.
Normally you will be deemed a UK resident in any taxable years as long as you live within the United Kingdom during the tax year (6 April to 5 April the following year).
You’ll be considered a resident in the UK if:
- you do not meet any of the automatic overseas tests
- you meet one of the automatic UK tests or the sufficient ties test
You’re automatically non-resident if either:
- you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
- you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working
You may be resident under the automatic UK tests if:
- you spent 183 or more days in the UK in the tax year
- your only home was in the UK and it was available to use for at least 91 days in total – and you spent time there for at least 30 days in the tax year
- you worked full-time in the UK for any period of 365 days and at least one of these days fell into the specific tax year
If you start a new job abroad, your residency status can change from year to year. For you, the tax year is divided by non-resident and resident parts.
This means that your income tax will only apply to income from outside the United Kingdom, often called ‘split year treatment.’ You will receive no split-year benefits if your tax returns last less than one full tax year in the UK.
- You must check your status if:
- you spend more/less time in the UK
- you buy or sell a house in the UK
- you change your job
- your family moves in or out of the UK, or you get married, separate or have children
Newcastle Immigration lawyers can advise you if your situation does not fall under any of the above categories, or if you are unsure of your residency status in any way.
Can you be a resident of two countries?
Yes. This is known as dual residence, and you will be taxed accordingly. There is an option to reside for tax purposes within several countries. Dual residence does not refer to your citizenship, only your residence status.
Tax on foreign income
Your UK residence status can influence the amount you pay in British taxes on your overseas earnings.
Non-UK residents are exempt from paying UK taxes on their foreign income/purchases.
The UK resident pays tax on their earnings regardless of whether they come from Britain or abroad. They need to pay UK tax for:
- Their foreign income
- Foreign investments
- Rental income on foreign property
- Foreign pension income
When to report your income to HMRC
You usually have to send a self assessment tax return if:
- you are a landlord in the UK (rent out property)
- you’re self employed in the UK
- you have a non UK pension but you were a UK resident in one of the 5 previous tax years
- you have other untaxed income
When tax is not due
For non UK residents, you do not usually have to pay UK tax on:
- the State Pension
- interest from UK government securities
If you live abroad but are still employed in the UK, your tax is calculated automatically on the days you work in the UK.
Income Tax is no longer automatically taken from interest on savings
Paying UK taxes abroad
For non-UK residents, you do not have to pay UK tax on your foreign income.
For UK residents, you do have to pay UK tax on your foreign income, however you may not have to pay if your permanent home or domicile is abroad.
You may be able to claim tax relief if you are being taxed in more than one country. A certificate of residence is required to become eligible for tax relief.
Frequently Asked Questions
In short, yes. If the Home Office considers your residency to be fraudulent, for instance if you have used any fake documents, they will strip you of that status.
You will not have to pay UK tax on employment income if you:
- earned it between the dates you intended to leave and when you left
- paid tax on it in your home country
No. If you have a permanent residence status you are able to live and work in the UK without an expiry date.
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