Tax on your UK income if you live abroad (2024)

FAQs

Do I pay tax on UK earnings if I live abroad? ›

You usually have to pay tax on your UK income even if you're not a UK resident. Income includes things like: pension. rental income.

Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits.

If you live abroad but are classed as a UK resident for tax purposes, you may have to pay UK tax on your pension. The amount you pay depends on your income. You need to tell HMRC if you move abroad. If you're not a UK resident, you don't usually pay UK tax on your pension.

90 day tie – the individual has been present in the UK for more than 90 days in either of the previous two tax years. Country tie – the individual is present in the UK at midnight in the tax year as much as (or more than) they are present in any other single country. This tie applies to 'leavers' only (see below).

US tax basics for British expats

If you are employed in the US, it is also your responsibility to tell your employer how much tax to deduct by completing a W-4 form. However, if you are earning in the US for a US company, you will be taxed at source but you will still have to file a tax return to the IRS.

If you are non-domiciled: No UK tax is charged on your foreign income or gains when: they are below £2,000 in the tax year. you do not bring your income into the UK, that is to say, you do not keep the money in a UK bank account.

The US-UK tax treaty is an essential tool for US citizens living in the UK, offering protection against double taxation, reduced withholding tax rates, and clarity on tax residency. While the treaty provides numerous benefits, claiming them requires understanding and filing specific forms.

The US is one of the few countries that taxes its citizens on their worldwide income, regardless of where they live or earn their income. This means that American expats are potentially subject to double taxation – once by the country where they earn their income, and again by the United States.

With the Foreign Tax Credit, you can show the U.S. how much money you paid in taxes to that foreign country and receive a credit for every dollar you owe, so you don't have to pay taxes for that same income again on your U.S. tax filing. If you qualify, you claim the Foreign Tax Credit by filing Form 1116.

You can claim and receive a UK State Pension while living overseas. But Pension Credit stops when you move overseas permanently. This is a means-tested benefit, which can top up your weekly income. Your State Pension can be paid to a UK bank or building society account, or to an overseas account in the local currency.

Will I lose my UK pension if I live abroad? ›

If you are retiring abroad, you can continue to receive your UK State Pension. You can get pension increases yearly if you live in a European Economic Area (EEA) country or a country which has a social security agreement with the UK.

U.K. State Pension and other similar payments received under the National Insurance legislation by U.S. citizens and Green Card holders residing in the U.K. are taxable in both countries. However, you can eliminate the burden of double taxation.

You can tell HMRC you're leaving through your Self Assessment tax return. Complete the 'resident' section (form SA109) and send it by post. You cannot use HMRC 's online services to tell them you're leaving the UK.

You're considered a UK resident for tax purposes if you meet any of the following conditions: you spend 183 days or more in the UK during the tax year. have a home in the UK. carry out full-time work in the UK.

If you spend fewer than 16 days in the UK in a tax year than you will always be non-resident in the UK for that year. If you spend 183 days or more in the UK then you almost certainly will be resident in the UK for that year.

A landlord who lives abroad for more than 6 months of the year must pay tax on any income they get from renting out property in the UK. If the landlord is a company or trustee, the rules about their usual place of abode apply. The tax is collected using the Non-resident Landlord Scheme.

Individuals who are non resident in the UK are not taxable in the UK on UK interest or dividends received. However, if tax is deducted at source from the interest and/ or dividends, then some or all of the tax may not be refundable ( this is known as disregarded income).

Can a UK company employ somone abroad ? Most UK employers will not employ workers outside the UK unless they are contractors or set up as a limited company. However, a UK contract can be issued to a EU based worker, but this does present some issues for both parties due to several grey areas.

You can claim online or use form P85 to tell HMRC that you've left or are leaving the UK and want to claim back tax from your UK employment. You can claim if you: lived and worked in the UK. left the UK and may not be coming back.