Do you have to pay tax if you work abroad?
I'm a UK citizen, but I live and work abroad. What taxes do I have to pay and to which government(s)?
Typically, yes, you will be subject to tax rules in at least one country, depending on where you live and where you're from, you may also be subject to taxes in your home country as well.
Exactly what tax is required to be paid and to whom will depend on your tax residence status in your home country, country of residence as well as the tax rules in each country.
For British citizens, if you are considered a non-resident of the UK, while you won’t have to pay tax on your income arising from your work abroad, you are likely to have to pay tax on your income in your country of residence.
For citizens of other nationalities, the tax rules will be different. For example, if you are an American citizen living abroad, you are still required to follow US tax rules and may be required to pay tax in the US as well as being subject to tax rules in your country of residence.
For people who are classed as a tax resident of the UK, in most cases, tax will be due on income arising from work outside of the UK.
Your UK tax residence status is established with the Statutory Residence Test.
For non-British expats, you may also be required to pay tax on your income, irrespective of where it is earned.
Finally, it is important to investigate whether there is a tax treaty between your country of residence and your country of domicile which could provide you with tax relief if tax is due in both countries.
Typical complications and planning opportunities which arise and require specialist advice are often where:
- you are dual resident in the UK and another country, as you need to establish which country has the taxing right over the employment income and make tax treaty relief claims (if a treaty exists) via your tax return;
- you are an expat that has a UK employer but spend some of your time working overseas;
- you are resident in a country which does not have a tax treaty with the UK and spend some workdays in the UK;
- you have a UK employer and are on a UK contract, but spend all of your time working overseas;
- you left the UK to work overseas but have returned to the UK too soon to have become non-resident.
If you are unsure about your tax situation and what tax is owed where, request a free introduction to one of our specialist tax partners and you will be able to get the answers you are looking for.
