How tax works when you leave the UK


If you are leaving the UK, you may believe that dealings with HMRC are no longer required. However, if you continue to receive UK incomes, you may have ongoing obligations with HMRC. Note that you will also have obligations if you sell property situated in the UK.

This is on the basis that HMRC will continue to tax UK sourced incomes, irrespective of where you are living.

UK sourced incomes include …

Rental income

From property situated in the UK.

Pension income

From the UK state or UK employer.

UK workdays

Workdays physically exercised in the UK.

Dividend income

From UK companies.

Bank interest

From UK banks.

Will you be entitled to tax free allowances?

Many non-resident individuals, including British & EEA nationals will continue to be entitled to the personal allowance (0% tax band) on an annual basis. You can check your entitlement here.

Providing that your UK sourced income is no more than the personal allowance, no tax will be payable to HMRC however, you may still have an obligation to disclose this income to HMRC on an annual basis.

What if you are employed in the UK but work 100% overseas?

The source of employment income is where you physically exercise work duties and therefore, if you suffer tax via PAYE while you are working overseas, you may be due a refund from HMRC. Furthermore, it may be possible to request that you are not subject to tax withholding so you that you can receive earnings gross of tax through submitting a ‘leaving questionnaire’ form. Further information can be found here.

What if you are subject to tax in the country you are living?

The UK’s network of double taxation agreements can mitigate double taxation by either completely removing the UK’s right to tax your income, limiting the tax rate that the UK can levy on your income or by allowing both the UK and overseas country to tax your income and requiring the overseas country to give a credit for tax suffered in the UK.

If you need to make a claim under a double taxation agreement, you will need to file a self-assessment tax return and complete HS302 or HS304 pages as necessary.

Do I need to file a UK tax return?

If you continue to receive UK income, you will likely have an obligation to file a tax return irrespective of whether tax is payable. You can check your statutory obligations here. Sometimes, it will be in your best interests to file a tax return to claim a refund or rely on a double taxation agreement to exempt the UK from taxing your income.

How can GTC help?

GTC can assess your exposure to UK taxation while you are living overseas, assist with non-resident tax planning to minimise UK tax exposure and assist with UK tax returns to ensure your compliance obligations are met with HMRC.

You can download our free ‘leaving the UK’ guide here.

Become a GTC client

Book a free discovery call with our team. We will collect background information to develop a greater understanding of the necessary steps to take to optimise your taxes and bring your affairs up to date.

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