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Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Legal Tax Reduction

Tax Incentives for UK Non-Residents

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As a non-resident of the UK, what tax incentives do you qualify for? Is tax reduction a goal? You can lower your taxes as a non-UK resident. Read on to get an overview of the tax benefits available for UK non-residents.

You may be surprised to discover that Britain’s tax rules can benefit non-residents in corporate and personal income taxes. As a non-UK resident, UK domestic law can lend a hand with asset protection.

At Nomad Capitalist, we help entrepreneurs and investors minimize their taxable income, as part of an intricate, holistic plan, in the UK and beyond. Become a client today, and we will help you optimize your taxes and maximize your investments.

United Kingdom Country Overview

The United Kingdom comprises England, Scotland, Northern Ireland, and Wales. The UK population is 67.8 million. London is the capital and also the UK’s largest city, with a population of 7.6 million.

United Kingdom Country Overview

Non-Resident UK Income Tax Incentives

For UK non-residents, your worldwide income is not subject to taxation in the UK. However, it’s essential to have an understanding of the tax laws in the country you currently reside in.

As a non-resident, HRMC (Her Majesty’s Revenue and Customs) only taxes you on your UK earnings. A double taxation treaty may also impact your taxable revenue.

Suppose you are sent to work in the UK for a maximum of two years. In that case, you might be able to get some income tax deductions for travel expenses and basic living costs, such as accommodation, utilities, and food, relating to your assignment.

Non-Resident UK Income Tax Requirements

Your UK residence status affects whether you need to pay UK tax on your worldwide income and gains. Whether you’re a UK resident depends on how many days you spend in the UK tax year that runs from 6 April to 5 April the following year. You’ll only be resident in the UK if both of the following apply:

  • You meet one or more of the automatic UK tests or the sufficient ties test
  • You do not meet any of the automatic overseas tests.

The three automatic tests to determine UK residency for tax purposes consider whether you:

  • spend 183 days or more in the UK in a tax year
  • have a home in the UK for all or part of the year and meet certain requirements for presence in the home
  • work full-time in the UK for 365 days, and meet specific requirements

If you don’t meet any automatic tests, you’ll be treated as a non-resident in the UK for tax purposes and then need to complete a self-assessment tax return.

You’re considered a tax non-resident if you either:

  • spent fewer than 16 days in the UK (or 46 days if you have not been a UK resident for the three previous tax years)
  • worked abroad full-time (averaging at least 35 hours a week, and spent fewer than 91 days in the UK, of which at most 30 you worked.)

When you move in or out of the UK, the UK tax year is ordinarily split in half, creating a non-resident part and a resident part. This means you only pay UK tax on worldwide income based on your time in the United Kingdom. This is referred to as “split-year treatment.”

You’ll only receive split-year treatment if you live abroad for an entire tax year before returning to the UK, and you’ll need to mention this on your self-assessment tax return.

The UK Taxation Sufficient Ties Test

If you were not a UK resident in any of the three years before the UK tax year in question, you would need to consider the following ties:

  • a family tie
  • an accommodation tie
  • a working tie
  • a 90-day tie

Double Taxation Relief Tax Rules

You are potentially entitled to double taxation relief, so you are not charged on the same income via foreign taxes courtesy of international tax agreements. Suppose you’re a non-resident of the UK. In that case, you can cut foreign tax liability by being a resident of the following jurisdictions that the United Kingdom has tax treaties with over 120 countries, including the US, Canada, Australia, China, most of its European neighbors plus other countries throughout Africa, Asia, and Latin America.

UK Non-Residents Personal Savings Allowance

A UK double taxation agreement could allow specific categories of individuals to benefit from personal savings allowance. In addition to any double tax treaty-related measures, if you are not resident in the UK, you may claim the same UK tax allowances as a UK resident if, at any time in the tax year, you meet any of the following conditions:

  1. You are a British citizen or a national of another member state of the European Economic Area (EEA), as in Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, or Sweden
  2. You are a resident of the Isle of Man or the Channel Islands
  3. You have previously resided in the United Kingdom and are resident abroad for the sake of your health, or the health of a family member who is resident with you
  4. You are or have been employed in the service of the British government.
  5. You are employed in the service of any territory under His Majesty’s protection
  6. You are employed in the service of a missionary society
  7. You are a widow, widower, or surviving civil partner whose late husband, wife, or civil partner was employed in the service of the British government.
Take advantage of double taxation agreements to claim UK tax relief so you are not taxed on the same income

Tax Non-Resident UK Income Tax Incentives Conclusion

In summary, your UK residence status is the factor that determines whether you need to pay UK tax on your foreign income.

Non-UK residents must pay income tax on UK earnings but do not need to pay UK tax on their worldwide income.

Generally speaking, residents pay UK tax on all their income, whether from the UK or abroad. But there are special rules for UK residents whose permanent home, or domicile, is abroad.

To be considered a tax resident in the UK, you must meet the automatic UK tests or the sufficient ties test.

Remember that you must report taxable income on your self-assessment tax return.

You must include all UK source income when filing your self-assessment tax return

UK Non-Resident Tax Incentives FAQ

Do UK Non-Residents Get a Tax-Free Personal Savings Allowance?

Yes. As a non-resident, you must claim the personal savings allowance at the end of each tax year in which you have UK income. You can fill in HM Revenue and Customs Form R43.

What Income Is Taxable in the UK for Non-Residents?

Your UK residence situation is the key to establishing your UK tax status. Whether you need to pay tax in the UK on your foreign income depends on whether you’re a tax resident. Non-residents only pay tax on their UK income. They are not required to pay UK tax on their foreign income. On the other hand, residents will need to pay UK tax on all their income, whether it’s UK source income or from abroad.

Do I have to Pay UK Taxes If I Live in the USA?

No. Suppose you’re not a UK resident. You don’t need to worry about your American earnings for UK tax purposes. That’s because you’re not obligated to pay UK income tax on your foreign income. You must pay tax on your foreign income if you’re a UK tax resident. But you may not have to if you’re a non-UK domiciled individual.

Can I Get an Income Tax Rebate If I Leave the UK?

Yes. You are eligible for UK tax relief or a tax refund if you’re no longer in the UK.
We can assist you with much more than your UK tax liability if you’re a non-resident. Our holistic plans cover everything from foreign tax to offshore income.
Become a Nomad Capitalist client today, and we will create a tailored Action Plan incorporating everything from taxation to obtaining residency visas to find the best solution for your needs.

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