UK tax implications of working abroad

Working abroad, whether through relocation, a temporary secondment, or remote work, can be an exciting opportunity, offering both a valuable career step and a different lifestyle.

However, it’s often assumed that moving and working overseas will simplify your tax position; when in reality, it often introduces a new layer of complexity.

As advisors, our role is to ensure our clients understand how UK tax rules apply when leaving the UK, in order to avoid unnecessary liabilities, and remain compliant across borders.

 

Tax residency remains the starting point

The single most important factor is UK tax residency. Under Revenue and Custom’s (HMRC) Statutory Residence Test (SRT), individuals are assessed annually to determine whether they are UK resident. The SRT examines criteria including: the number of days you are present in the UK during a tax year, your work patterns i.e whether you are deemed to work abroad full-time or not, and  based on your personal ties to the UK.

Your status as either resident or non-resident for tax purposes, will impact how you are taxed by HMRC.

This means:

• UK residents are generally taxed on their worldwide income and gains, although some may qualify for specific reliefs on foreign income depending on their circumstances.
• Non-residents are generally taxed on UK-source income and certain UK gains, such as income or gains relating to UK property.

It’s often presumed that leaving the UK automatically ends UK tax obligations. In reality, residency status can remain unchanged, particularly where individuals retain UK ties such as property, family, or frequent visits.

 

Split-year treatment: a valuable but misunderstood tool

Where you move abroad part-way through the tax year, split-year treatment may apply if certain conditions are met. This effectively divides the tax year into a UK part and an overseas part.

However, eligibility is strict.

For example, individuals leaving to work full-time overseas must meet working-hour thresholds and limits on UK visits. Misapplication is common and can result in unexpected tax charges or compliance issues.

 

Double taxation: risk and relief

A key concern when working abroad is double taxation i.e. being taxed on the same income in two countries. This typically arises when you’re a tax resident in one jurisdiction, but you’re earning income in another.

The UK’s extensive network of double taxation agreements (DTAs) aims to mitigate this risk. These treaties determine:

• Which country has taxing rights
• Whether tax is relieved via exemption or credit

In many cases, double taxation can be relieved under agreements between countries, either by exempting the income in one country or giving credit for tax paid in the other.

Case study: A common scenario involves a UK professional working abroad while retaining UK income (e.g. rental property). Both jurisdictions may initially tax the income, but relief must be actively claimed. Failure to do so can result in overpayment and cash flow strain.

 

Real-world complexity: lessons from a case study

An public case study involving a doctor illustrates how easily issues can arise where an individual works across jurisdictions. During the pandemic, the doctor worked in both the UK and France. He later faced an HMRC enquiry after using estimated figures for foreign salary and UK day counts. The case highlights the importance of understanding residency, source of income, treaty relief and maintaining accurate travel records.

Two main risks:

• Misunderstanding how residency interacts with foreign income
• Poor record-keeping, particularly around days spent in each country

If you’re working across borders, you must maintain detailed travel and income records to support your tax position.

 

Working remotely abroad for a UK company

The growth of cross-border remote work has added another layer of complexity. Even where you remain employed by a UK company, remote working from abroad can:

• Change your tax residency status
• Trigger foreign tax obligations
• Create compliance issues for employers

Global guidance is evolving. The OECD’s 2025 update to the Model Tax Convention provides further guidance on when cross-border home-office or remote-working arrangements may create a permanent establishment risk for an employer.

Additionally, remote working patterns can unintentionally shift an individual’s tax residence, exposing them to new reporting and tax liabilities.

 

Planning considerations

Proactive planning is essential to ensure you don’t fall foul of tax rules. Key steps include:

• Establish residency status early using the SRT before or during relocation
• Assess eligibility for split-year treatment and structure the move accordingly
• Review double taxation agreements to optimise relief claims
• Track days and maintain documentation to avoid disputes
• Consider employer implications, especially for remote or hybrid arrangements

 

Final thoughts

Working abroad is often an exciting step, filled with opportunity. However, understanding your tax position should be a priority from the outset. With UK rules increasingly focused on residency, particularly following the shift away from domicile-based regimes in 2025, failing to plan ahead can lead to unexpected liabilities and compliance risks.

As advisors, our role is to simplify this complexity and ensure you meet your tax obligations, while maximising tax reliefs and protecting your personal wealth. With the right advice, working internationally can be both professionally rewarding and financially optimised.

Contact our experts today for advice on your tax residency and obligations.