Tax Implications of Moving Abroad While Still Earning UK Income
- MAZ
- 16 hours ago
- 21 min read
Index
Understanding Your UK Tax Obligations When Moving Abroad with UK Income
Notifying HMRC and Dodging Double Taxation When You Move Abroad
How Different UK Income Types Get Taxed When You’re Living Abroad
Tax Challenges for UK Business Owners Moving Abroad with UK Company Income
Long-Term Tax Strategies and Rare Scenarios for Expats with UK Income
Summary of All the Most Important Points Mentioned In the Article
The Audio Summary of the Key Points of the Article:
Listen to our podcast for a comprehensive discussion on:
Do You Pay Tax On Compensation Payments?
Understanding Your UK Tax Obligations When Moving Abroad with UK Income
If you’re moving abroad but still earning UK income, here’s the straight answer: you might still owe UK tax on that income, depending on your residency status, the type of income, and where you’re living. The UK tax system doesn’t just wave goodbye when you pack your bags—it keeps an eye on your UK-sourced earnings, like wages from a British employer or rental income from a London flat. But don’t sweat it yet! This guide will break it all down, starting with the basics of how HMRC decides what’s taxable, backed by the latest 2025 figures and real-world examples.
In this first part, we’ll dive into the nuts and bolts of UK tax rules for expats still tied to UK income streams. Expect hard stats—like the £12,570 Personal Allowance—and practical insights to help you dodge overtaxing nightmares. Let’s get cracking with the key factors HMRC uses to figure out your tax bill.
Why Your Residency Status Is the Tax Game-Changer
First things first: your tax obligations hinge on whether you’re a UK resident or a non-resident. HMRC doesn’t care where you sip your morning tea—it’s all about the Statutory Residence Test (SRT). This test, updated as of March 2025, looks at three things: how many days you spend in the UK, your ties (like family or a home), and your work patterns.
Automatic UK Resident: Spend 183+ days in the UK in a tax year (6 April 2025 to 5 April 2026)? You’re a resident, and all your worldwide income—including that UK salary—is taxable here.
Automatic Non-Resident: Spend fewer than 46 days in the UK (or 16 if you’ve been resident the past three years)? You’re likely non-resident, meaning only UK-sourced income gets taxed.
Ties Test: If you’re in the grey zone (46–182 days), HMRC counts ties like a UK-based job or family. More ties + more days = higher chance of residency.
For 2025, the tax year runs from 6 April 2025 to 5 April 2026, and the rules are locked in—check them out on GOV.UK’s residency page. Say you’re moving to Spain but working remotely for a UK firm. Spend 100 days in the UK with a spouse still in Manchester? You might still be a resident. Spend 30 days with no ties? You’re likely non-resident. It’s that simple—and that complicated.
The 2025 UK Tax Bands and Personal Allowance You Need to Know
Let’s talk numbers. As of March 2025, the UK’s tax bands and Personal Allowance are frozen until 2028, per HMRC’s latest updates. Here’s what you’re working with if you’re a UK resident earning UK income:
Tax Band | Income Range (2025/26) | Tax Rate |
Personal Allowance | £0 – £12,570 | 0% |
Basic Rate | £12,571 – £50,270 | 20% |
Higher Rate | £50,271 – £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
Personal Allowance: £12,570 tax-free. Earn over £100,000, and it shrinks by £1 for every £2 above, hitting zero at £125,140.
National Insurance (NI): If your UK employer runs payroll, you’ll pay NI too—8% on earnings between £12,570 and £50,270, dropping to 2% above that (as of 6 April 2025).
Non-residents? You lose the Personal Allowance unless you’re from an EEA country or Switzerland, or you claim it back via form R43 (more on that later). Your UK income—like a £40,000 salary—gets taxed at 20% from the first pound unless a double taxation agreement (DTA) kicks in. Verify these rates at HMRC’s tax bands page.
How UK Income Stays on HMRC’s Radar
Moving abroad doesn’t mean your UK income vanishes from HMRC’s sights. Here’s what’s taxable, based on 2025 rules:
Employment Income: Work for a UK company? If you’re resident, your full salary’s taxable. Non-resident? Only pay tax on days worked in the UK—split-year treatment might apply if you leave mid-tax year.
Rental Income: Own a Birmingham flat? Non-residents pay tax on UK rental profits via the Non-Resident Landlord Scheme—20% basic rate unless you file a Self Assessment.
Pensions and Dividends: UK state pensions are usually tax-free for non-residents, but private pensions and dividends might still cop UK tax unless a DTA says otherwise.
How UK Income Stays on HMRC’s Radar
Take Elowen Tregaskis, a graphic designer who moved to Portugal in April 2024 but kept her £35,000 UK job. She spent 50 days in the UK in 2025/26, with no ties. Non-resident status meant her UK salary was only taxed on UK workdays—say, 10 days at £135/day (£1,350), taxed at 20% (£270). The rest? Portugal’s problem, if they tax it.
Emergency Tax Traps and Payroll Pitfalls
Here’s where it gets messy. UK employers often use PAYE (Pay As You Earn), deducting tax based on your tax code. Move abroad mid-year, and you might get slapped with an emergency tax code (e.g., 1257L W1/M1), taxing every pound without your full Personal Allowance. In 2023/24, 1.2 million taxpayers overpaid due to incorrect codes, per HMRC stats—many were expats.
Imagine Jago Penrose, a London sales manager earning £60,000. He moved to Canada in July 2024, kept his UK job, and got hit with emergency tax. His July payslip showed £5,000 taxed at 40% (£2,000) instead of 20% (£1,000) after the allowance. He reclaimed it via a P85 form, but it took three months—ouch! Check your tax code monthly at www.gov.uk/check-income-tax-current-year.
Setting the Stage for Smarter Tax Moves
So, residency rules, tax bands, and payroll quirks are your starting point. Moving abroad with UK income isn’t a tax-free holiday—HMRC’s got a long reach. But understanding these basics tees you up to avoid overpaying and spot refunds. Next, we’ll unpack how to tell HMRC you’re leaving, dodge double taxation, and handle those pesky forms—because who doesn’t love a bit of paperwork, right?
British Expats & Pensioners: Migration and Tax Stats (2020-2025)
Notifying HMRC and Dodging Double Taxation When You Move Abroad
So, you’ve got the residency basics down from Part 1—now it’s time to get practical. Moving abroad while earning UK income means you’ve got to tell HMRC, figure out if you’ll be taxed twice, and wrestle with a few forms. Don’t worry, though—it’s not as bad as it sounds! This part’s all about the how-to: notifying HMRC properly, leveraging double taxation agreements (DTAs), and making sure you’re not overpaying in two countries. We’ll throw in some real-life examples and 2025 updates to keep it crystal clear.
Telling HMRC You’re Leaving: The P85 Form and Beyond
First up, you’ve got to let HMRC know you’re off. The key player here is the P85 form—your official “I’m leaving the UK” note. As of March 2025, you can file it online via your Government Gateway account or post it the old-school way. It asks for your departure date, new address, and whether you’re keeping UK income—like that £50,000 salary from your London gig.
Why It Matters: Filing a P85 triggers HMRC to adjust your tax status. Leave mid-tax year (say, 1 October 2025), and you might qualify for split-year treatment, taxing you as a resident until you go, then non-resident after. Miss it, and you’re stuck on PAYE, overpaying like mad.
Timing: Submit it as soon as you leave—delays can mean emergency tax codes (think 1257L M1) eating your payslip. In 2024/25, HMRC processed over 150,000 P85s, per their latest stats, so they’re used to this.
Take Morwenna Lobb, a Bristol-based consultant who moved to Australia in June 2024, keeping her £45,000 UK contract. She filed her P85 late—December 2024—and got hit with six months of emergency tax, losing £3,600. A refund came after HMRC sorted her non-resident status, but she waited until March 2025. Lesson? File early—check the process at GOV.UK’s P85 page.
Double Taxation Agreements: Your Safety Net
Here’s the big worry for expats: double taxation. Earn £30,000 from a UK job while living in Germany, and both HMRC and the German tax office might want a slice. Enter Double Taxation Agreements (DTAs)—treaties between the UK and 100+ countries to stop this madness. As of March 2025, the UK’s DTA network is rock-solid, updated annually on GOV.UK’s DTA list.
How It Works: DTAs decide which country taxes what. For employment income, it’s usually where you perform the work. Work remotely from Spain for a UK firm? Spain taxes it, and the UK steps back. Work in the UK for 20 days? The UK taxes that chunk.
Tax Credits: If both countries tax (rare), you claim a credit in one against the other’s tax. The UK’s foreign tax credit relief caps at your UK tax liability.
Consider Tegen Pascoe, a UK software developer who moved to the Netherlands in January 2025, earning £60,000 remotely for a Manchester startup. The UK-Netherlands DTA says her Dutch-taxed income (at 36.93% up to €75,518) gets a UK credit. She paid £12,000 in Dutch tax; the UK’s 20% (£12,000) was offset, so no extra UK bill. Without the DTA? She’d have forked out double.
Self Assessment: When You’ve Got to File
Non-resident with UK income? You might need to file a Self Assessment tax return. As of 2025, the deadline’s 31 January following the tax year—e.g., 31 January 2027 for 2025/26. HMRC’s rules say:
Non-Residents: File if you’ve got UK rental income, dividends, or untaxed employment income. Skip it if PAYE covers your salary and you’ve no other UK sources.
Residents: Worldwide income’s in play—file regardless.
Filing’s easy online via HMRC’s Self Assessment portal. Penalties for missing it? £100 initially, then £10 daily up to £900—don’t sleep on this!
Payroll Impacts: What Your UK Employer Needs to Know
If you’re on a UK payroll, moving abroad can throw a spanner in the works. Employers must adjust PAYE based on your residency and work location. In 2023/24, HMRC reported 300,000+ payroll errors linked to expats—think over-deducted tax or NI.
Non-Resident: Tell your employer to stop NI if you’re working abroad full-time (unless you’re in the EEA/Switzerland with special rules). Tax stays if UK duties persist.
Split Duties: Work 50% in France, 50% in the UK? Your employer splits taxable pay—tricky, but doable with a P85 and DTA.
Picture Piran Verran, a Leeds accountant who relocated to Ireland in August 2024, earning £70,000 from a UK firm. He worked 60 days in the UK, 120 abroad. His employer taxed £20,000 (UK days) at 40% (£8,000) via PAYE, while Ireland taxed the rest. A P85 and DTA sorted it, but his HR team fluffed the NI split—costing him £1,200 until corrected.
Refunds and Overpayments: Getting Your Cash Back
Overpaid tax because of a dodgy tax code or late P85? You can claim it back. For non-residents, form R43 reclaims the Personal Allowance if you’re from an eligible country (EEA/Switzerland). Residents use the P85 or Self Assessment. HMRC’s 2025 guidance says refunds take 6–12 weeks—faster online.
In 2024, 1.5 million UK taxpayers reclaimed £2.7 billion, per HMRC’s annual report. Expats like Morwenna? They’re a big chunk of that. Track your refund at GOV.UK’s tax checker.
Keeping the Tax Train Rolling
You’re now armed with the know-how to notify HMRC, dodge double tax, and tweak your payroll. It’s all about staying proactive—file that P85, check your DTA, and keep your employer in the loop. Next up, we’ll zoom into specific income types (salaries, rentals, dividends) and how they’re taxed abroad—because not all UK cash gets the same treatment!
British Expat Pensioners: Financial Contributions & Migration Patterns (2020-2025)
How Different UK Income Types Get Taxed When You’re Living Abroad
Now let’s get into the nitty-gritty of what happens to your UK income streams when you’re sipping sangria in Spain or maple syrup in Canada. Not all income gets taxed the same way, and moving abroad adds a twist. This part breaks down employment income, rental profits, dividends, and pensions, with 2025 figures and practical examples to keep you ahead of the tax game. No fluff—just the facts you need to avoid surprises.
Employment Income: Where You Work Matters
If you’re still earning a UK salary after moving abroad, the tax depends on where you perform the work and your residency status. HMRC’s 2025 rules, straight from GOV.UK’s foreign income page, are clear:
UK Resident: Your whole salary—UK or not—is taxable here. A £50,000 wage hits the 20% band (£7,540 tax after the £12,570 Personal Allowance).
Non-Resident: Only UK workdays get taxed. Work 30 days in the UK out of 200 total? 15% of your salary (£7,500) faces UK tax—20% on that is £1,500.
Double Taxation Agreements (DTAs) often shift the burden. Take Lowen Trevelyan, a Cardiff marketer who moved to Italy in May 2024, keeping her £40,000 UK remote job. She worked 20 days in the UK in 2025/26, spending 40 days total here—non-resident per the SRT. The UK taxed £4,000 (20 days’ pay) at 20% (£800), while Italy taxed the rest under the UK-Italy DTA. Her UK employer adjusted PAYE after her P85, but an initial emergency code cost her £500—refunded later.
Rental Income: The Non-Resident Landlord Scheme
Got a UK property pumping out rent? Non-residents face the Non-Resident Landlord (NRL) Scheme, updated for 2025 on HMRC’s NRL page. Here’s the deal:
Taxed at Source: Letting agents or tenants deduct 20% basic rate tax from your rent before paying you—e.g., £1,000 monthly rent becomes £800.
Self Assessment Option: Apply to HMRC (form NRL1) to receive rent gross and file a tax return. Offset expenses (repairs, mortgage interest) to lower your bill.
Say Enys Polglase owns a Glasgow flat, renting for £12,000 yearly. He moved to Portugal in July 2024, becoming non-resident. Without NRL1, his agent withheld £2,400 (20%). Filing Self Assessment, he claimed £3,000 in expenses—taxable profit dropped to £9,000, tax to £1,800. He saved £600 by dodging the default deduction. Residents? You’d report it all under UK rules, with the Personal Allowance in play.
Dividends: A Tricky Tax Twist
UK dividends—say, from shares in a British firm—get trickier abroad. As of March 2025, HMRC’s rates (per GOV.UK’s dividend tax page) are:
Tax Band | Rate on Dividends |
Basic | 8.75% |
Higher | 33.75% |
Additional | 39.35% |
Residents: £500 tax-free allowance, then these rates apply after your Personal Allowance.
Non-Residents: No allowance, but UK tax only applies if no DTA shifts it. Many DTAs (e.g., UK-US) cap UK tax at 15% or nix it entirely.
Picture Tamsin Carne, a retired exec who moved to France in 2023, earning £10,000 in UK dividends in 2025/26. Non-resident, she faced no UK tax under the UK-France UK-France DTA—France taxed it at 30% (£3,000). If she’d stayed a UK resident, she’d pay 33.75% (£3,375) after the £500 allowance. DTAs can flip the script—check yours!
Pensions: State vs. Private Breakdown
Pensions split into two camps:
State Pension: Non-residents usually escape UK tax, per 2025 rules. It’s paid gross, taxed in your new country if they bother (e.g., Spain taxes it; Canada doesn’t).
Private/Occupational Pensions: Taxed in the UK unless a DTA says otherwise. A £20,000 pension might face 20% (£4,000) if you’re non-resident, but the UK-Australia DTA could shift it Down Under.
Kensa Jory, a retired teacher, moved to New Zealand in 2024. Her £15,000 UK private pension got taxed at 20% (£3,000) as a non-resident—NZ added its own 17.5% (£2,625). No DTA relief here, so she paid both. A quick DTA check could’ve saved her a bundle.
Mixing It Up: Multiple Income Streams
Got a salary, rent, and dividends? Each follows its own rules. Gwithian Trelawney, a Londoner turned Dubai expat in 2025, earned £30,000 (UK job), £10,000 (rental), and £5,000 (dividends). Non-resident, he paid:
£1,500 on 25 UK workdays (20%).
£2,000 on rent (NRL, no expenses claimed).
£0 on dividends (UK-UAE DTA).
Total UK tax: £3,500. Dubai’s 0% tax meant no double hit, but sloppy paperwork could’ve doubled it. Cross-check your sources with HMRC!
How Different UK Income Types Get Taxed When You’re Living Abroad - A Graphical Presentation
Prepping for the Next Step
Employment, rentals, dividends, pensions—they all dance to different tunes when you’re abroad. Residency, DTAs, and proactive filing are your lifelines. Next, we’ll tackle business owners—because running a UK company from abroad adds a whole new layer of tax fun!
Tax Challenges for UK Business Owners Moving Abroad with UK Company Income
If you’re a UK business owner packing up for sunnier shores—or anywhere else—while still pulling income from your UK company, you’re in for a tax adventure. Parts 1–3 covered residency, forms, and income types, but running a business adds a whole new layer. This part’s your roadmap: how dividends, salaries, and company structures get taxed when you’re abroad, with 2025 figures and practical tips to keep HMRC happy. Whether you’re a sole trader or a limited company boss, we’ve got you covered—let’s break it down!
Residency and Your Business: The Starting Line
As of March 2025, per GOV.UK’s residency rules, it’s the same drill:
UK Resident: Your worldwide income—including company profits or dividends—is UK-taxable.
Non-Resident: Only UK-sourced income (e.g., dividends from your UK Ltd) gets HMRC’s attention, unless a DTA shifts it.
But here’s the kicker: your company’s tax status doesn’t move with you. A UK-registered firm stays UK-taxed on its profits—20% Corporation Tax in 2025/26 for profits over £50,000 (small profits rate 19% below that), per HMRC’s rates page. Your personal tax? That’s where your new address comes in.
Dividends from Your UK Company: A Global Tax Tango
Most UK business owners take dividends as income. Moving abroad doesn’t stop HMRC eyeing them, but DTAs can save your bacon. 2025 dividend tax rates (unchanged since 2023) are:
Tax Band | Rate |
Basic | 8.75% |
Higher | 33.75% |
Additional | 39.35% |
Resident: £500 allowance, then these rates after your £12,570 Personal Allowance.
Non-Resident: No allowance, but UK tax depends on your DTA—many cap it at 15% or zero.
Take Jowan Tresize, who ran a £200,000-profit Bristol tech firm. He moved to Singapore in April 2024, becoming non-resident, and took £50,000 in dividends in 2025/26. The UK-Singapore DTA nixed UK tax (Singapore’s 0% helped too). Resident? He’d have paid 33.75% (£16,875) after the allowance. File a P85 and check your DTA—huge difference!
Salaries and Director’s Fees: PAYE vs. Abroad
Paying yourself a salary from your UK company? It’s taxed like employment income (Part 3):
Non-Resident: UK tax only on UK workdays. Work remotely from Portugal? No UK tax unless you pop back for meetings.
Resident: Full salary’s taxable, with PAYE and NI via your company’s payroll.
Senara Verran, a Leeds boutique owner, moved to Cyprus in 2025, keeping her £30,000 director’s salary. Non-resident, she worked 10 days in the UK—£1,500 taxed at 20% (£300). Cyprus taxed the rest at 0% below €19,500, then 20%. Her UK firm still paid Corporation Tax on profits, but her personal bill shrank. Mess up the P85? Emergency tax could’ve doubled that £300.
Sole Traders and Partnerships: A Different Beast
Not a limited company? Sole traders and partnerships face UK tax on profits if you’re resident. Non-resident? Only UK-sourced profits (e.g., UK clients) get taxed—file via Self Assessment by 31 January 2027 for 2025/26, per HMRC’s self-employed page.
Kevern Polkinghorne, a freelance consultant, moved to Germany in 2023, earning £60,000—half from UK clients. Non-resident in 2025/26, he paid 20% (£6,000) on £30,000 UK income via Self Assessment. Germany taxed all £60,000 (42% max rate), but the UK-Germany DTA gave a credit, capping his total hit. Residents pay UK rates on everything—40% (£18,860) after allowances.
Company Structure Risks: HMRC’s Watchful Eye
Moving abroad doesn’t mean you can dodge UK company tax tricks. HMRC’s 2025 anti-avoidance rules—think IR35 and Controlled Foreign Company (CFC) regs—still apply:
IR35: Contracting through your Ltd? If you’re “inside IR35” (employee-like), PAYE applies to UK work, resident or not.
CFC Rules: Shift profits to a low-tax country like Dubai? If you control it and it’s artificial, HMRC taxes it back in the UK.
In 2024, HMRC clawed back £1.2 billion from CFCs, per their annual report. Don’t play fast and loose—keep it legit.
Case Study: The Relocating Entrepreneur
Meet Demelza Nancarrow, who ran a £500,000-turnover Manchester design agency. She moved to Spain in July 2024, staying non-resident with 40 UK days in 2025/26. Her income mix:
Salary: £40,000 (10 UK days = £4,000 taxed at 20%, £800).
Dividends: £50,000 (UK-Spain DTA capped UK tax at 15%, £7,500).
Company Tax: £90,000 profit taxed at 20% (£18,000)—her firm paid, not her.
Spain taxed her full £90,000 at 24% (£21,600), but UK credits offset £8,300. Total tax: £29,900 vs. £36,860 as a UK resident. Her P85 and DTA savvy saved £6,960—proof planning pays.
Payroll and NI for Your Team
Got UK staff? Your company’s payroll stays UK-based, deducting PAYE and NI (13.8% employer rate in 2025). Moving doesn’t change that—but if you hire abroad, local rules apply. Senara’s Cyprus move didn’t shift her Leeds shop’s payroll; she just tweaked her own tax.
Setting Up for the Finale
Business owners, you’ve got options—dividends, salaries, or profits all shift with residency and DTAs. Stay sharp with HMRC filings and company rules to keep your cash.
Graphical Presentation of Tax Challenges for UK Business Owners Moving Abroad with UK Company Income
Long-Term Tax Strategies and Rare Scenarios for Expats with UK Income
You’ve nailed residency (Part 1), notified HMRC (Part 2), sorted income types (Part 3), and tackled business quirks (Part 4). Now, let’s look ahead—how do you keep your tax bill lean over the long haul, snag refunds, and handle those weird edge cases? This part’s your playbook for staying tax-smart abroad, with 2025 insights and real-life fixes for UK taxpayers and entrepreneurs. Whether you’re dodging overpayments or planning a decade overseas, we’ve got the goods—let’s dive in!
Long-Term Tax Planning: Playing the Smart Game
Moving abroad isn’t a one-and-done tax event—it’s a marathon. Here’s how to keep HMRC off your back and your wallet happy, per 2025 rules:
Maximize DTAs: Double Taxation Agreements evolve—check GOV.UK’s DTA updates yearly. A 2024 UK-US tweak cut dividend tax from 15% to 10%—small shifts, big savings.
Split-Year Treatment: Leave mid-tax year (e.g., 1 August 2025)? Apply via P85 for resident taxing until departure, non-resident after. Saves you from a full year’s UK rates.
Bank the Personal Allowance: EEA/Switzerland expats can claim £12,570 tax-free via form R43—file annually if eligible, says HMRC’s relief page.
Cadan Tremayne, a Liverpool engineer, moved to Norway in 2023, earning £55,000 from a UK firm in 2025/26. Non-resident, he worked 20 UK days (£5,500 taxed at 20%, £1,100). Norway taxed all at 34% (£18,700), but split-year treatment from his 2023 P85 and a DTA credit kept his total tax at £15,800 vs. £20,000 as a full-year resident. Planning ahead? Gold.
Refunds: Claw Back Overpaid Tax
Overpaid tax is a silent killer—HMRC’s 2024/25 stats show 1.5 million taxpayers reclaimed £2.7 billion. Expats often overpay via PAYE or late residency updates. Here’s how to fix it:
P85 Refund: Emergency tax from a mid-year move? P85 adjusts your code—expect cash in 6–12 weeks.
R43 for Non-Residents: EEA/Swiss folks reclaim the Personal Allowance on UK income—e.g., £10,000 rental profit gets £2,000 back at 20%.
Self Assessment: Overpaid NI or tax on dividends? File by 31 January (e.g., 2027 for 2025/26) to claim.
Iseult Penvenen, a Kent teacher, moved to Ireland in 2024, keeping a £25,000 UK pension. Emergency tax took £5,000 in 2025/26. Her P85 and R43 (Ireland’s EEA) refunded £3,500—she tracked it at GOV.UK’s tax checker. Don’t leave money on the table!
Rare Scenarios: When Tax Gets Weird
Not every expat fits the mould—here’s how to handle oddball cases:
Short-Term Moves: Back in the UK within a year? HMRC might treat you as resident all along if ties (home, family) persist. Towan Kellow went to Dubai for 6 months in 2025, earning £40,000—40 UK days tipped him resident, taxing all at 20% (£5,486) vs. £800 non-resident.
Employer Errors: UK firm forgets you’re abroad? PAYE might overtax. In 2024, 300,000 payroll mistakes hit expats—fix it with a P85 and payslip proof.
Tax Haven Traps: Move to Monaco with a UK Ltd? HMRC’s CFC rules could tax profits here if it’s a dodge—£1.2 billion reclaimed in 2024.
Business Owners: Advanced Moves
Entrepreneurs, level up with these:
Offshore Structuring: Shift your Ltd to a low-tax spot like Ireland (12.5% Corporation Tax)? Legal, but HMRC’s exit charge taxes unrealized gains—20% on £100,000 assets is £20,000.
Pension Contributions: Pay into a UK scheme from abroad—tax relief up to £60,000 annually (2025/26 cap) if resident, per HMRC’s pension page.
Pryce Boscawen, a Birmingham retailer, moved to Malta in 2025, running a £300,000-profit Ltd. He took £60,000 dividends (0% UK tax via DTA), kept the firm UK-taxed (£57,000 at 19%), and banked £40,000 in a pension—£8,000 relief. Total tax: £49,000 vs. £70,000 resident. Sharp moves pay off.
Real-Life Case Study: The Expat Veteran
Gwenna Kerensa, a Glasgow lawyer, moved to Canada in 2023, earning £70,000 (UK job), £15,000 (rent), and £10,000 (dividends) in 2025/26. Non-resident (30 UK days):
Salary: 15 UK days (£5,250) taxed at 20% (£1,050); Canada taxed all at 33% (£23,100), DTA credited £1,050.
Rent: NRL took £3,000; Self Assessment cut it to £2,400 after expenses.
Dividends: UK-Canada DTA capped UK tax at 15% (£1,500).
Total tax: £26,000 (UK £4,950, Canada £21,050 post-credit) vs. £33,000 resident. Her P85, R43 attempts (Canada’s non-EEA), and annual DTA checks kept her lean. Lessons? File fast, know your treaty, and double-check payroll.
Wrapping the Tax Journey
Long-term planning, refunds, and rare twists tie this all together. Whether you’re an employee, landlord, or business mogul, moving abroad with UK income means staying proactive—P85s, DTAs, and Self Assessments are your tools.
Summary of All the Most Important Points Mentioned In the Above Article
Your UK tax liability depends on your residency status, determined by the Statutory Residence Test, which considers days spent in the UK and ties like family or work.
UK residents pay tax on worldwide income, while non-residents are taxed only on UK-sourced income, such as salaries from UK employers or rental profits.
The 2025/26 UK Personal Allowance is £12,570, but non-residents lose it unless from the EEA/Switzerland and claim via form R43.
Filing a P85 form when leaving the UK adjusts your tax status and can prevent emergency tax codes that overtax your income.
Double Taxation Agreements (DTAs) with over 100 countries prevent paying tax twice, often shifting tax to where work is performed or capping rates.
Employment income is taxed based on UK workdays for non-residents, while rental income falls under the Non-Resident Landlord Scheme with 20% deducted unless offset via Self Assessment.
UK dividends face tax rates of 8.75%–39.35% for residents, but non-residents may pay 0%–15% under DTAs, with no £500 allowance.
Business owners abroad still face UK Corporation Tax (19%–20%) on company profits, while personal income like dividends or salaries depends on residency and DTAs.
Over 1.5 million taxpayers reclaimed £2.7 billion in 2024/25 due to overpayments, fixable with forms like P85 or R43, especially for expats hit by payroll errors.
Long-term strategies include maximizing DTAs, securing split-year treatment, and avoiding HMRC’s anti-avoidance rules like CFC or IR35 pitfalls.
Geographical Summary: Tax Implications of Moving Abroad While Still Earning UK Income
FAQs
Q1. Can you lose your UK citizenship by moving abroad and still earning UK income?
A. No, moving abroad and earning UK income doesn’t affect your citizenship—it’s a tax and residency matter, not a legal status issue.
Q2. How does earning UK income abroad affect your UK credit score?
A. Earning UK income while abroad doesn’t directly impact your credit score, but missing UK tax payments or debts could, depending on creditor actions.
Q3. Are there penalties for not notifying your UK bank about moving abroad with UK income?
A. UK banks don’t require notification for tax purposes, but failing to update your address might breach account terms, risking freezes—check with your bank.
Q4. Can you claim UK tax relief on foreign mortgage interest if you’re earning UK income abroad?\
A. No, HMRC doesn’t offer relief on foreign mortgage interest for UK income—relief applies only to UK property expenses.
Q5. Does moving abroad with UK income affect your eligibility for UK benefits like Child Benefit?
A. Yes, moving abroad can stop Child Benefit if you’re non-resident, even with UK income—eligibility ties to UK residency, not income source.
Q6. How do you handle UK VAT if you’re a business owner abroad still selling to UK customers?
A. You must register for UK VAT if your taxable UK sales exceed £90,000 (2025 threshold), regardless of where you live—file via HMRC’s VAT portal.
Q7. Can you still contribute to a UK ISA while living abroad with UK income?
A. No, you can’t add to a UK ISA as a non-resident, even with UK income—existing ISAs stay tax-free but can’t grow with new funds.
Q8. What happens to your UK student loan repayments if you move abroad with UK income?
A. You must repay your UK student loan based on worldwide income, including UK earnings—notify the SLC with proof or face penalties.
Q9. Are there UK tax implications for cryptocurrency earnings while abroad with UK income?
A. Yes, UK crypto gains are taxable if you’re a resident; non-residents pay only if the crypto is UK-sourced—separate from your UK income tax.
Q10. Can you be audited by HMRC after moving abroad if you still earn UK income?
A. Yes, HMRC can audit you for up to 6 years (20 if fraud’s suspected) if you earn UK income—residency doesn’t stop their reach.
Q11. How does Brexit affect your UK tax obligations when moving to the EU with UK income?
A. Post-Brexit, EU residents lose automatic Personal Allowance unless a DTA applies—your UK income tax depends on specific country treaties.
Q12. Can you claim UK tax deductions for foreign healthcare costs while earning UK income?
A. No, HMRC doesn’t allow deductions for foreign healthcare costs against UK income—deductions are UK-specific, like work expenses.
Q13. What are the tax implications of inheriting UK property while abroad with UK income?
A. Inheritance Tax applies if the estate’s UK-based (40% over £325,000 in 2025), regardless of your residency—your UK income isn’t factored in.
Q14. Can you still use a UK accountant for tax filings if you’re abroad with UK income?
A. Yes, you can hire a UK accountant to manage your UK tax obligations—many specialize in expat filings remotely.
Q15. How does moving abroad affect your UK car insurance if you earn UK income?
A. Your UK car insurance isn’t tied to income but to residency—if you’re non-resident, you may need to cancel or switch to foreign coverage.
Q16. Are there UK tax benefits for donating to UK charities while abroad with UK income?
A. No, non-residents can’t claim Gift Aid or tax relief on UK charity donations—relief requires UK residency.
Q17. Can you defer UK tax payments if you’re temporarily abroad with UK income?
A. No, HMRC doesn’t offer deferrals for temporary moves—tax is due based on your residency status and income timing.
Q18. How does earning UK income abroad impact your UK state pension contributions?
A. You can pay voluntary NI contributions (Class 2 or 3 in 2025) to boost your state pension, even abroad—UK income doesn’t auto-qualify you.
Q19. What happens if your new country doesn’t have a DTA with the UK and you earn UK income?
A. Without a DTA, you could face full tax in both countries—UK on UK income, new country on worldwide income—with no automatic relief.
Q20. Can you appeal an HMRC tax decision after moving abroad with UK income?
A. Yes, you can appeal within 30 days of an HMRC decision via their online portal or post—residency doesn’t block your rights.
Disclaimer:
The information provided in our articles is for general informational purposes only and is not intended as professional advice. While we strive to keep the information up-to-date and correct, My Tax Accountant makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained in the articles for any purpose. Any reliance you place on such information is therefore strictly at your own risk. The graphs may also not be 100% reliable.
We encourage all readers to consult with a qualified professional before making any decisions based on the information provided. The tax and accounting rules in the UK are subject to change and can vary depending on individual circumstances. Therefore, My Tax Accountant cannot be held liable for any errors, omissions, or inaccuracies published. The firm is not responsible for any losses, injuries, or damages arising from the display or use of this information.
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