Living in the UK & Working Abroad? Here’s How You’re Taxed

Navigating Dual Tax Residency: UK and International Rules for Cross-Border Employment

Living and working across borders is becoming more common than ever before, however so too are the complexities of navigating international tax. If you’re spending time in both the UK and abroad, you may be wondering: “Where exactly do I pay tax?”

Below we break down the key considerations around UK tax residency, foreign income, and double taxation, helping you stay compliant and avoid costly mistakes.

What Is Tax Residency and Why Does It Matter?

Your tax residency status determines where and how you pay income tax. In the UK, this is based on the Statutory Residence Test (SRT), which looks at:

• – Days spent in the UK
• – UK ties (family, work, accommodation)
• – Your residency status in previous years

Other countries typically use similar tests such as the amount of time spent in the country per tax year or maintaining a permanent home there.

Split Year Treatment

If you move into or out of the UK partway through a tax year, you may qualify for Split Year Treatment. This means that instead of being taxed as a UK resident for the entire tax year, HMRC will treat the year as split into two parts:

1. A non-resident part, when you are not subject to UK tax on foreign income and gains
2. A UK resident part, when normal UK tax rules apply

This can significantly reduce your UK tax liability by exempting income earned before or after your UK residency begins or ends.

Working Abroad While Living in the UK (or Vice Versa)

UK Resident, Working Abroad

If you’re UK tax resident, you must report on all your worldwide income to HMRC. This includes foreign income or additional earnings such as rental income and capital gains unless specific reliefs, such as Overseas Workday Relief, apply.

Non-UK Resident, Working in the UK

If you live abroad but work physically in the UK, you may owe UK tax specific to that income, even if you’re not UK resident.

You may still be liable to UK tax if you:

• – Physically perform work in the UK
• – Earn UK-source income, such as: Employment earnings, Consulting fees for UK-based clients or Rental income from UK property

The portion of income earned while physically present in the UK is usually taxable in the UK. You’ll often be required to complete a Self-Assessment tax return to report this and pay any tax due to HMRC. Any additional income which has been earned abroad, may be exempt from tax, depending on the tax rules of your residing country.

How to Avoid Double Taxation

Double taxation occurs when the same income is taxed by both the UK and another country. This becomes a common issue for those living or working internationally. Fortunately, the UK has multiple Double Tax Treaties (DTTs) in place to help prevent this, either by assigning taxing rights to one country or allowing tax credits or exemptions.

If you’re UK tax resident and have already paid foreign tax on income, you can usually claim Foreign Tax Credit Relief through your Self-Assessment return, offsetting the overseas tax against your UK liability. Alternatively, certain income may be exempt under treaty provisions. To claim relief, you’ll need to provide accurate records of your foreign income and taxes paid. While the system offers robust protection, it’s not automatic. Careful reporting and compliance are essential to avoid paying tax twice on the same income.

Navigating International Tax

Whether you’re living in the UK and working abroad, relocating internationally, or juggling income across multiple countries, understanding how UK tax residency and international tax rules apply is crucial. From claiming relief under double tax treaties to determining if you qualify for split year treatment or Overseas Workday Relief, the tax implications can be complex and costly if handled incorrectly.

Every situation is unique. Even a few days’ difference in residency or poorly timed decisions can change your tax liability. That’s why it’s essential to get tailored advice. Our team of expert tax advisers can help you stay compliant, avoid double taxation, and structure your affairs efficiently.