UK Tax Rules Explained for Remote Workers & Expats
Working remotely for a UK company while living abroad is increasingly common. But if you’re on UK payroll and physically working overseas, your tax position may change significantly.
In many cases, UK tax is being deducted when it shouldn’t be, meaning you could be due a tax refund from HMRC. At the same time, you may create tax or social security obligations in the country you’re living in.
This guide explains how UK tax works when you work abroad for a UK employer, how residency affects your tax bill, and how to file a UK tax return from overseas correctly.
Can You Work for a UK Company While Living Abroad?
Yes — you can legally work for a UK company from abroad, provided you comply with:
- UK tax rules
- Local tax laws in the country you are working from
- Immigration and visa requirements
Important: This article covers tax only. Always check local visa and employment laws before working remotely in another country.
How Residency Affects Your UK Tax When Working Abroad
Your UK tax residency status is the single most important factor in determining whether your UK salary is taxable.
If You Become UK Non-Resident
If you qualify as a UK non-resident under the Statutory Residence Test (SRT):
- You are only taxed in the UK on UK-sourced income
- Employment income is not taxable in the UK if all work duties are performed overseas
- Typical UK-sourced income includes:
- UK rental income
- UK pensions
- UK trading income
Even if your employer is UK-based, salary relating to overseas workdays is not UK-taxable.
UK Payroll While Working Abroad: Common Issue
Many people working abroad remain on UK payroll, and HMRC continues to deduct PAYE tax automatically.
If this happens:
- You may be on the wrong tax code
- You may be due a UK tax refund
- HMRC often requires a Self Assessment tax return to correct this
Correct Tax Code for Non-Residents
If you are non-resident and perform all work abroad, you should usually be on an “NT” tax code (No Tax).
In practice:
- Employers often don’t update this automatically
- PAYE tax is deducted incorrectly
- A refund must be claimed via a tax return
What If You Have Some UK Workdays?
If you perform a small number of workdays in the UK, those days are treated as UK-sourced employment income.
In most cases:
- This income is covered by your UK personal allowance
- Especially if you are a UK or EEA national
- Or eligible via a double taxation agreement
This means no UK tax is ultimately payable, even if PAYE was deducted initially.
Will I Pay Tax in the Country I’m Living In?
Very likely, yes.
Most countries tax individuals based on where the work is physically performed, not where the employer is based.
If you are:
- Legally resident abroad, or
- Spending sufficient time in that country
Then your host country may tax:
- Your UK salary
- Any other worldwide income
Double Taxation Agreements (DTAs)
The UK has double taxation agreements with over 120 countries, designed to prevent you being taxed twice on the same income.
Depending on the treaty:
- You may claim exemption before tax
- Or claim a refund or tax credit after tax
- Relief is usually claimed via a UK Self Assessment tax return
How Do I Inform HMRC and File a UK Tax Return From Abroad?
To correctly report overseas working, you will usually need to file:
Required HMRC Forms
- SA100 – Main Self Assessment return
- SA102 – UK employment income
- SA109 – Residence, remittance basis & overseas workdays
The SA109 is critical — this is where you formally declare non-residency and overseas working.
Failing to submit it correctly can result in:
- Incorrect tax bills
- Missed refunds
- Ongoing PAYE errors
