Understand your tax responsibilities if you are leaving the UK to work or live abroad

As a law-abiding citizen of the UK, you have a primary responsibility to pay the correct amount of taxes on time to HM Revenue & Customs every tax year. You can do this yourself or by hiring a specialist Tax Accountant.

If you are planning to leave the UK to live abroad, there is a set of legal obligations that you must be aware of and fulfil before you take off. If you are a contractor thinking of working abroad our contractor’s startup guide is a good starting point.

This article discusses everything you need to know about working out your taxes before you leave to work or live abroad. Tax can get complicated so even though our article provides information to help you tackle the issue it is always recommended to seek professional advice such as from a Tax Accountant.

What about your tax obligations if you are leaving the UK to work abroad?

You are liable to inform HM Revenue & Customs if you are planning to either:

1. Exit the UK to live abroad permanently

or

1. Leave the UK for full-time employment abroad for at least a whole tax year

Planning Note: Tax year begins from 6th April and ends on 5th April of next year

However, you have no obligations to inform HMRC if you are going on a vacation or a business trip abroad.

How to inform HMRC before leaving?

To inform HMRC about your departure for employment purposes from the UK, you need to fill in Form P85 or HMRC’s online service. You must include parts 2 and 3 of Form P45 as well. You can acquire your P45 form from your employer or from ‘jobcentre plus’ (Only if you are seeking to claim Jobseeker’s Allowance).

You may send in your Self Assessment tax return to HMRC if you usually send one every tax year, say if you have self-employment.

Related: How to Complete Your Self Assessment Tax Return- Step by Step Guide (Visual Infographic)

You need to send in a P85-form and a tax return if you are leaving the UK to work for a UK based employer abroad for a whole year at least.

How to send in your tax return before you leave?

Availing HMRC’s online service is disallowed when informing the authorities about leaving the UK. You are liable to inform HMRC by:

1. Sending in your tax return by a courier post
2. Using commercial software
3. Seeking assistance from a professional, say an accountant

Ensure that you fill-up the ‘residence section’ in your tax return (SA109-form if you are sending it in by a courier post).

You are at risk of getting penalized if you fail to meet the deadline. The deadline falls earlier (31st October) if you send in your tax return by post.

If in doubt use a specialist, our personal tax accountants can help you with a variety of tax services, why not review our services and speak to us to help ease the process of leaving the UK.

What if you are a non-resident?

Individuals with non-resident status in the UK are not liable to pay UK tax on earnings and gains they receive in a foreign country. You can be declared a non-resident even after a day after you leave the UK; however, that depends upon the situation and the conditions of ‘split-year treatment’ and how it applies to you.

Ensure that you inform other people if you are moving or plan to retire abroad, say the council in your area so that you don’t pay ‘Council tax’ anymore.

What if you are owed a refund?

If you are owed a refund for the tax year, then you don’t need to worry as HMRC works out anything you are owed as a refund and will refund it to you based on your choice of refund method.

What if you have an income source from the UK?

If you are receiving income from a source in the UK, say rental property, then you are liable to pay the UK tax on that income even if you are a non-resident in the UK.

If you are worried about paying double taxes, then you need to know that the UK has a double taxation agreement with many countries. It’s your responsibility to check whether the country you plan to work in has such an agreement with the UK or not.

Related: If you have a UK tax to pay you might want to know How to Make Some Tax-Free Income, click to read more.

What about National Insurance (NI)?

Depending on two conditions, you can carry on paying your National Insurance (NI) like before if:

1. You have a plan to return to the UK in the future.
2. You plan to claim your state pension in the future.

You should know that you won’t be allowed to claim any National Insurance as soon as you leave.

If the country you are leaving for has a social security agreement with the UK, then any National Insurance you have paid for is considered as benefits in the new country.

If you will still have a business in the UK after you leave you might want to figure out an optimal pay structure to avoid paying NI or reducing it as much as possible.

How can I seek Jobseeker’s Allowance abroad?

Jobseeker’s allowance is one of the benefits you can claim, but only if you’re looking for employment in a European Economic Area (EEA) country.

What to do if your circumstances change?

You are expected to contact and inform HMRC if there is a change in your circumstances while living abroad; for instance, you get married or move to a new house. You’ll also be expected to give in your National Insurance number if needed.

Also, you are responsible for informing HMRC if you have come back to live in the UK.

What about visiting the UK and your resident status?

You are allowed to visit the UK without changing your resident status depending on your response to the following questions.

1. The reason for your visit
2. The time duration of your visit

If you are employed full-time in a foreign country, then you may be given up to 90 days to visit and stay in the UK. This stay is only allowed if you work no more than 30 of the 90 days allowed.

You will reinstate your resident status in the UK, if you engage yourself in new activities in the UK, say you purchase a new property or engage yourself in new business.

Remember to check your residency status if you’re confused or clueless about how your activities in the UK might impact your resident status. You can also speak to tax accountants of an accounting firm to help with the process.

Clear House Accountants are specialist Accountants in London who have developed their in-house tax accountants with tax planning, advisory and process skills, so as to be able to add maximum value to Sole-traders, Limited companies or Partnerships.

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