I’m working in more than one country, am I liable to pay Tax in the UK?
In the modern world, many of us are spending our time living and working in more than one country. To determine how much UK tax is due, it is important to understand your residence status for tax purposes.
In the UK, a Statutory Residence Test (SRT) determines an individual’s residence for a given tax year. It applies a series of tests, which take into account days spent in the UK, days working in the UK and overseas and your connections with the UK. The tests are applied in a specific order until your residence position is established. One of the most complex areas of the SRT relates to ‘splitting’ a tax year into two periods when an individual leaves or comes to the UK.
Generally, if you are resident in the UK, you are liable for UK tax on your worldwide income and gains. However, if you are not-domiciled in the UK and spend a proportion of your time working overseas, you may be able to claim tax relief for your overseas workdays.
If you are not resident in the UK, you may still be liable to tax on income arising in the UK such as UK property income and earnings attributed to days spent working in the UK.
Separate rules apply for National Insurance Contributions (NICs). You may be required to continue paying NICs when you work overseas although employees that come to the UK to work but remain under an overseas employment contract are normally required to pay NICs.
This legislation is complex and HMRC’s guidance on residency covers over 100 pages. Contact Emma or Nicola on 01223 810100 for friendly help and guidance in determining your residency status for tax purposes.