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Navigating HMRC’s tax rules, especially if you're self-employed and a non-resident in the UK, can be tricky. But as your UK residence status determines how much tax you owe, it's crucial to get a grip on the basics.
Put simply, while UK tax residents pay UK tax on all their income (whether it’s from the UK or abroad), non-residents only pay tax on their UK income. So if your permanent home is overseas, some special rules apply to you, and you won’t pay UK tax on your income from back home.
But what exactly are the rules, how do you work out your residence status, and how do you pay HMRC the tax you do owe? Let's break it all down in simple terms.
Understanding your UK residence status
Your UK residence status largely hinges on how many days you spend in the UK in the tax year (which runs from the 6th to 5th April).
You’ll count as a UK resident for the tax year you’re checking if:
- You spent 183 or more days in the UK in that tax year
- The UK was your only home was for 91 days or more in a row - and you stayed in it for at least 30 days of the tax year
- You have worked full-time in the UK for any period of 365 days, with at least one day of that period being in the tax year you’re assessing
If you have other ties to the UK, like work or family, you might also count as a resident under the sufficient ties test.
If none of the above applies, you’ll likely be non-resident in the UK for tax purposes.
You can get help on HMRC’s website to determine whether or not you’re a non-resident in the UK. However, due to the complexity of the rules, we recommend speaking to a professional accountant or tax adviser for personalised advice.
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Can my residence status change from one tax year to the next?
Absolutely. You should check your UK residence status if your circumstances change, due to something like:
- Spending more or less time in the UK (even a few days more or less than the previous year could put you into a new threshold)
- Buying or selling a home in the UK
- Starting a new job
- Getting married, divorced or having children
- Having your family move to or leave the UK
What happens if I move during the tax year?
Not only can your residence status change from one tax year to the next, but your residence status for tax-purposes can actually change part-way through the year as well.
This is because the UK government gives ‘split-year treatment’ to people who relocate to the UK - or move back to their own country. This means the tax year is divided into two: a resident part and a non-resident part. Split-year treatment makes sure non-residents only pay UK tax on foreign income for the duration of their stay.
However, this rule only applies to people who live abroad for a full tax year or more before returning to the UK. There are other specific conditions that must be met, so if you are unsure, we recommend speaking to a professional accountant or tax adviser to find out whether the rule will apply to you.
How do I pay tax as a non-resident in the UK?
Once you’ve confirmed your non-resident status for the tax year you’re checking, it’s time to pay the tax you owe.
As a non-resident, you’ll only be paying tax on your UK income - and if you’re self-employed or a freelance worker, you’ll do this in much the same way as a UK resident would; by filling out an annual Self Assessment tax return and submitting it to HMRC by the annual deadline (31st January).
Completing your Self Assessment (or Form SA100) is usually done online, though it’s still possible to file in the old fashioned way with a paper form.
Self Assessment is HMRC’s way of finding out how much Income Tax and National Insurance you need to pay. Unlike employees working under the PAYE system, self-employed workers handle their own tax deductions, including dividends, pensions and savings income. To do this, you must let HMRC know about all of your earnings and expenses, and HMRC will use this information to calculate your dues. They’ll then let you know how much Income Tax and National Insurance you need to pay.
You can find out more here in our guide to filing your Self Assessment tax return online.
If you’re planning to set up and run a UK limited company or sole trader business as a non-resident in the UK, read our guidance for following HMRC’s rules.
Get additional help
In a nutshell, understanding how taxes work for non-residents in the UK is vital for managing your money and staying compliant while working in the UK. Knowing your residence status, figuring out your tax situation and adapting to changes are all key parts of the process.
But don’t worry if you’re still feeling a little confused about your residence status or HMRC’s rules - you’re definitely not alone!
If you need help understanding what tax you owe as a non-resident, or how to pay it, speaking with a professional accountant or tax expert is the right move. The experts can give you advice based on your specific situation, clearing up any confusion so that you can enjoy your time working in the UK as a non-resident to the max.
