Working Overseas

The UK taxes its residents on their worldwide income and gains, so your ‘tax residence’ is critical in determining how much UK tax you must pay.

‘Domicile’ is a legal word generally used to define the place where you have your permanent home. It is therefore used more to define your long-term habitation, as opposed to your residency, which is more short-term.

The location of your domicile is important if you are UK resident and not domiciled in the UK and have overseas income.

In working out your tax liability, residency applies to both you personally and your company.

Your residency position is worked out using the ‘statutory residency’ tests devised by HMRC.

There are three elements to the statutory residency tests: the ‘automatic overseas tests’, the ‘automatic UK tests’ and the ‘sufficient ties tests’.

Because there may be specific local tax implications and restrictions in operating through your company (or individually) overseas, we recommend that you seek advice from an overseas specialist before making a decision.

You only need to tell HMRC about living/working abroad if you expect to break your UK tax residence.

A P85 is a form completed by anyone who plans to leave the UK to work abroad full-time for at least one complete tax year. It helps to ensure that your UK tax position is correct.

If you arrive in the UK, or leave the UK during the tax year, special rules apply. These are known as ‘split year rules’.