UK Non Resident Tax Guide
If you are not a UK resident, special tax rules apply to your UK income. In simple terms a non resident should only pay tax on income from a source in the UK.
UK non residents paying tax in the UK could be paying too much depending on the type of income and the percentage of tax deducted.
For UK tax purposes a “non-resident” is an individual who does not reside permanently in the UK but still earns taxable income within the country.
UK non residents are often expats who generate earnings from a variety of sources like rental properties and other types of UK based investments.
If you are classed as a non resident for tax purposes, some of your income may remain taxable in the UK.
Non-residents are required to pay UK tax solely on their income derived from the UK, excluding income obtained from abroad (which will usually be subject to tax in the respective foreign jurisdiction).
Tax rules for non residents are complex and can change. With so many factors affecting your tax status it is vital that you understand which ones apply to you.
Our UK non resident tax guide highlights what you need to know about UK tax and being a non resident for tax purposes.
Am I a UK resident for tax purposes?
A person’s liability to income tax in the UK is in the main dependent on their tax residence and domicile status.
Other sources of income and assets can also have an effect on whether you are deemed a UK non resident.
Typically HMRC will consider you as a non-resident if one of the following applies:
- you stayed in the UK for less than 16 days (or 46 days if you were not a UK resident in the previous three tax years)
- you were employed full-time overseas (averaging at least 35 hours per week), and spent fewer than 91 days in the UK, with no more than 30 of those days spent working
Working out your status can be complicated as it depends largely on your own personal circumstances.
HMRC have brought in a statutory residence test which can help you find out your non residence status.
The HMRC residence status checker can provide an indication of whether you were a UK resident in previous tax years.
HMRC ask you to have details relating to the following for the year you’re examining:
- The number of days you spent residing in the UK
- The number of days spend working in the UK and approximate number of hours worked per week
- The number of days working overseas and approximate number of hours worked per week
- Family members you have in the UK
- information about your home in the UK
Do non residents have to complete a tax return?
Not all non residents will be asked by HMRC to complete a tax return and usually depends on the type of taxable income you have.
Generally you have to submit a self assessment tax return if you are a non resident if you get income from sources like self employment, a partnership or buy to let property.
It’s worth knowing that HMRC’s free on-line tax return system does not let you complete the necessary pages for being a non resident.
Only commercial software can be used to submit a tax return (including non resident pages) online.
Am I due a non resident tax refund?
Non residents can overpay UK tax income from sources like property, dividends, pensions and bank or building society interest.
As a qualifying UK non-resident, you have the right to reclaim tax and personal allowances on any UK income received during the current tax year or within the previous four tax years.
If you complete a self assessment tax return you will receive any UK tax back after you have submitted your tax return and HMRC have processed it.
The form R43 can be used if you don’t complete a tax return and can be used if you pay tax on investment income like bank interest or dividends which HMRC don’t typically need you to declare on a tax return if this is your only UK income.
HMRC reference: Download Help Sheet 300: ‘Non-residents and investment income’ (PDF 77K)
A form R43 let’s you claim your tax free personal allowance which can result in a repayment of tax paid through PAYE.
Do I get a tax free personal allowance as a non resident?
HMRC gives some UK non residents a personal allowance which allows income up to the PA threshold to be free from tax.
You should qualify for the personal if:
- You hold British citizenship.
- You are a citizen of a European Economic Area (EEA) nation.
- You have been employed by the UK government at any point during that tax year.
- You may qualify for if it is stipulated in the double-taxation treaty between the UK and the country where you reside.
If you don’t complete a tax return the form R43 should be used to claim the personal allowance each and every tax year.
HMRC doesn’t apply the personal allowance automatically when income isn’t declared on a tax return.
UK non resident landlords
Individual landlords are typically considered as non resident if they live outside the UK for six months or longer and this is irrespective of their UK tax residency status.
The Non-Resident Landlord Scheme, is ran by HMRC to collect rental income from UK properties, by ensuring that tenants or letting agents deduct the owed tax each month before the overseas landlord receives any rent.
When non-resident landlords file their UK self assessment tax return, the tax previously paid by tenants or letting agents to HMRC can be offset against their UK tax liability.
Non-resident landlords can opt out of the NRL scheme and request to receive rent in full directly, which means any tax owed is paid by themselves through Self Assessment.
UK non resident pension tax relief
Living outside the UK does not automatically stop you paying UK income tax on your pension income.
In some cases tax relief can be available on one or both private or government pension income.
Your eligibility relies on the legislation within the double taxation treaty between the UK and your country of residence.
The legislation varies from country to country so you need to check the details of the UK double taxation treaty that applies to you.
Non residents and double taxation
Many countries have double taxation agreements. These ensure that the same income or gains aren’t taxed in more than one country, or, where applicable, tax is charged at a reduced rate.
If you’re a resident of a country which the UK has a double taxation agreement with, you might be able to claim full or partial relief from UK tax on certain types of income from sources like a UK private or government pension.
Do I need to tell HMRC about my non residency?
The answers is ‘yes’, with the tax office expecting you to declare your non resident status.
The onus is on you to tell HMRC about your non residency with nothing happening automatically.
Depending on your situation you will need to let HMRC know about your non residency status in different ways.
If you do not need to complete a Self Assessment tax return, a P85 leaving the UK form should be completed before or as you are leaving the UK.
When a Self Assessment tax return is required this includes all of the necessary information that HMRC will need to calculate your non residency tax position.
