Relocating to the UK, tax, international tax

Do I pay tax if I work abroad?

By Keith Pilkington

​Working out whether you need to pay tax when you work overseas is a complex matter, and you’ll probably have a lot of questions.

How are you taxed if you work abroad?

UK residents who have their permanent home outside the UK may not have to pay tax on foreign income. Your permanent home – also known as domicile – is usually the country your father considered his permanent home when you were born (but this might change if you’ve moved from the UK and don’t plan to return).

Do you pay UK tax on foreign income?

Foreign income is anything from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign. You may need to pay UK Income Tax on your foreign income, which includes:

  • Wages if you work abroad

  • Foreign investments and savings interest

  • Rental income on overseas property

  • Income from pensions held overseas

Working this out

Whether you need to pay depends on if you’re classed as a resident in the UK for tax. If you’re not classed as a UK resident, you won’t have to pay UK tax on foreign income. If you’re non-domiciled, you don’t pay UK tax on foreign income or capital gains if they are less than £2,000 in the tax year and you don’t bring them into the UK – e.g. if you don’t transfer them to a UK bank account.

If you’re a UK resident, you’ll usually pay tax on your foreign income. But you may not have to if your domicile is abroad.

Reporting foreign income

If you need to pay tax, and your foreign income / capital gains are more than £2,000 in the tax year, you must declare it in a self-assessment tax return.

To find out more about this topic, contact Keith Pilkington.