What Happens to My Tax If I Work Abroad?
19th April 2016
If you're claiming regular tax refunds from HMRC, then the chances are your job involves some travel. If that travel takes you abroad for a while, then your tax situation can get messy. The first thing you have to realise is that working abroad doesn't necessarily get you off the UK tax hook. The taxman's got no problem chasing you, and there's basically no place to hide. Here's what you need to know to stay safe.
Do I Need To Tell HMRC If I Am Working Abroad?
Let's say you're hopping overseas for a job. Top of your to-do list should be letting HMRC know what you're up to. You'll also need to contact the tax agency of the country you'll be working in. Don't think you can just nip out for a few months of work and no one will care. They will, and they'll make sure you know about it.
If you're heading out for less than a full tax year and you usually file your own taxes, then you can do this as normal. If you're not on Self Assessment, you should talk to HMRC about your situation.
If you're going to be working abroad for longer, then you'll need to do some extra homework. There's a form called P85, which deals with long-term work abroad. It sounds scary, but it's really about making sure you can claim any refund you're due before you go. They'll ask why you're leaving and what you'll be doing while you're gone. Pretty basic stuff.
Do I Still Pay Tax In The UK If I Work Abroad?
A big consideration is whether or not you'll become "non-resident" in the UK for tax purposes. There are a couple of tests the taxman uses to figure this out. For instance, people who work on oil rigs or for the government have their own rules. If that sounds like you, get some professional advice well before you ship out.
Long story short: unless you're going overseas more or less permanently, you'll probably still be paying UK tax. Even if you're not coming back, you might still be taxed on any income you get here (bank interest, for example). In some cases, you might actually end up paying tax in both countries - which is terrifyingly called "double taxation".
The UK has some agreements in place to try to prevent people getting taxed twice, so make sure you know where you stand.
Do I Still Pay National Insurance If I Work Abroad?
As for whether you'll still pay National Insurance contributions, the answer is "it depends". Mainly, it'll vary with where you're going and how long you'll be there. If you'll be working for a foreign employer, you might not have to pay UK NICs at all. Of course, you'll probably end up paying the foreign equivalent instead.
There's a lot to digest there, and your individual situation can make a huge difference. The bottom line is, if you're going abroad to work, get in touch with RIFT first. If you're owed a tax refund, we'll get it paid - and we'll keep you out of trouble at the same time.