Taxation for British citizens living abroad can be confusing, so in this guide we explore expat tax UK rules – and explain what determines whether you count as a UK tax resident or not.

In recent years, HMRC has increased efforts to target British expats who, knowingly or unknowingly, don’t declare the right amount of tax once they reside overseas.

And according to BBC News there are approximately 5.5m Brits living abroad, or about 8% of the UK population. Well over 1m live in Australia, with Spain the next most popular destination for expats.

Read on for our guide into UK tax for expats and what counts as your tax residence when you live abroad.

UK resident status

One cause of confusion among expats who live abroad but still spend several months per year in Britain is whether they still count as a UK resident.

The government has an online tool for checking your UK residence status.

You usually count as non-resident if per year, you:

  • Spend under 16 days in the UK
  • Spend under 46 days in the UK, if you have not been a UK resident for the three previous tax years
  • Work abroad full-time, at least 35 hours a week, spending fewer than 91 days in the UK (of which no more than 30 were spent working)

As a general rule, expats need to continue paying tax on income arising from a source in the UK. That means you pay tax to HMRC on:

  • Profits from any trade taking place in the UK
  • Property-related profits if the land is in the UK
  • Employment income relating to UK duties
  • UK pension income
  • UK partnership income

If you receive pay as you earn (PAYE) income in the UK, HMRC will receive the income tax from your employer. If you count as a UK resident and are working freelance, HMRC will expect to receive an annual tax return.

Expat tax rules for the UK

Whether you’re a UK tax resident or not, HMRC requires an annual return if some of your income from a UK source does not deduct tax before you receive it.

That includes those who:

  • Have savings, investments and property
  • Earn approximately £100,000 or more 

The tax free personal allowance, £12,570 for the tax year 2023/24, is also available to all non-resident British citizens. As with UK residents though, if you earn over £125,000 in a tax year, you do not receive a personal allowance.

This means you have to earn £12,570 from a UK income source before you are subject to income tax.

In the past, the government has considered restricting non-residents’ entitlement to the personal allowance, so there is no guarantee that the status quo will remain indefinitely.

Examples of expat taxes

If you are an expat but also a landlord for UK property, you must file a tax return. There is a dedicated procedure called the Non-Resident Landlord Scheme:

  • The tenant or letting agent deducts tax from rental income before the landlord receives it
  • HMRC receives the income tax each quarter – i.e. every three month period, ending on 30 June, 30 September, 31 December and 31 March

Non-resident landlords can apply to HMRC and ask to pay the tax due on rental income via self assessment instead. Our previous blog around tax on rental income has more details for landlords.

Even if you’re non-resident for tax purposes, you also have to pay tax on gains you make on property and land in the UK. But unless you return to the UK within 5 years of leaving.

You do not pay Capital Gains Tax on other UK assets, for example shares in British companies. Here is our guide on Capital Gains Tax for small businesses.

If the source of income is in the UK, dividends, interest and other savings are also taxable.

Double tax treaties

If you live somewhere that taxes your global income, you may be worried about the risk of paying tax on the same income in two countries – the UK and where your home is abroad.

But if you live in a country that has a double taxation treaty (DTT) with the UK, that won’t be the case.

DTTs specify which country has primary rights to receiving tax on different types of income and how to allocate payments between them.

Many countries have a DTT with the UK. This includes European countries and also major expat destinations such as:

  • US
  • Canada
  • Australia
  • New Zealand
  • India
  • South Africa

There is a list of UK government tax treaties available.

Final thoughts: Expat taxes UK rules

We hope you’ve found this guide helpful – there’s plenty to think about when you’re an expat with ties to the UK. For more useful articles, check out our blog.

Previously we’ve written about paying debt to HMRC via a Time To Pay (TTP) arrangement, for example. At the time of writing, our most recent blogs cover:

If you need any help with your tax situation, we’re here to help. If you would like a free, no-obligation chat or need any more information then please don’t hesitate to get in touch.