A Guide On How To File UK Tax Returns For Non Residents

Moving abroad can be an exciting adventure, but it’s important to understand your tax obligations when you leave the UK. One often misunderstood area is the steps involved in how to file your UK tax returns for non residents while overseas. For this blog I am referring to UK tax system for UK citizens. You will need to do your research on how the laws apply elsewhere.

First of all, It’s crucial to know that moving abroad does not automatically mean you can avoid filing UK tax returns. Even if you’ve lived overseas for an extended period, you may still need to file a return, depending on your residency status and other factors.

Understanding Your Residency Status

The first step is to determine your residency status. Your tax obligations will vary depending on whether you are considered a “resident” or a “non-resident” for UK tax purposes.

Factors affecting residency status:

• Period of absence: While there’s no exact number of days that automatically determines residency, generally, if you spend more than 183 days in the UK in a tax year, you are likely to be considered a UK resident. However, this is a simplified rule and other factors, such as your intention to return and your economic ties, will also be considered.
• Intention to return: Your plans to return to the UK in the future.
• Family ties: The location of your spouse and children.
• Economic ties: Your financial interests and investments in the UK.

The HMRC website has a Statutory Residency Test (SRT) that you can take to help determine your residency status.  

Filing Tax Returns As A Non-Resident

For UK tax purposes you are usually considered a non-resident if you: 

• Spend less than 16 days in the UK within a tax year (46 days if not a UK resident for the 3 previous tax years); 
• Work abroad full-time (averaging 35 hours a week)
• Spend fewer than 91 days in the UK and no more than 30 of them were spent working. 

Based on the above, if you are considered a “non-resident” in the UK then you do not need to pay any UK tax on income or gains that you earn abroad.  

Double Taxation Agreements

Thankfully, many countries have double taxation agreements (DTAs) with the UK to prevent individuals from being taxed twice on the same income. These agreements often include provisions for tax relief to avoid double taxation. Make sure you check out the DTA between your new home country and the UK as you may still need to pay UK takes on your UK income.  

• Pensions and Savings: The taxation of pensions are covered in Article 17 will depend on your residency status and the type of scheme involved but is usually only taxable where you are resident. Savings interest in covered in Article 11 and may be subject to tax.
• Capital Gains Tax: If you sell assets while living abroad, you may be subject to UK capital gains tax.
• Wages from UK Employment: Covered in Article 14 and usually taxable where you are resident unless you exercise your duties in the other country.  

If you’re not sure how DTA applies in your new country then seek professional advice. There can be articles that make your situation more complicated.

Filing Your Tax Return With HMRC

You need to let HMRC know if you are moving abroad full-time for at least one full tax year (ie 6 April to 5 April) or leaving permanently.   You must know that your UK Citizenship will not be affected by your decision to move abroad and you’ll still usually be able to vote in the UK elections. 

Make sure that you also let your local council know that you are leaving the country so that you do not continue to be charged for Council Tax. 

If you do not usually complete a Self Assessment tax return because you are employed and you already live abroad you should fill in form P85 online.  If you are still in the UK then fill in form P85 offline and make sure to include Parts 2 and 3 of your P45 that your employer should have.  

If you do usually complete a Self Assessment return because you are self-employed, a landlord or have other UK taxable income that you report then you must complete the resident supplementary page (form SA109) to report your residence and domicile status.   

The UK tax year runs from 6 April until the following 5 April.

Once you are abroad you cannot file your tax return via the GOV.UK government website as it is not available for people who live outside of the UK.

Instead, you have a few available options: 

• Fill the forms out by hand and sent them via post. 
• Use commercial filing software like GoSimpleTax (who we use), for all of the necessary forms. The software is designed for accuracy and to help you avoid potential errors.  The software will then send your tax returns to HMRC on your behalf.  You can get a free trial and discount for GoSimpleTax using our link.  
• Pay a UK accountant to file your tax return for you. They can help you understand your tax obligations and may be able to help identify tax savings for you. 

Doing it yourself is much simpler than you may realise and of course is much cheaper than hiring an accountant. GoSimpleTax make filing your tax return really easy and they have a fantastic support team on hand with tax experts if you need them.   Once you file your tax return, HMRC will inform you if you are due a tax refund.  

If you do not usually submit a tax return then you need to make sure that you register for Self Assessment by 5th October the following tax year after which you had the taxable UK income otherwise you could be charged a penalty by HMRC.

If you use choose to use filing software file online, the deadline is midnight on 31 January following the end of the tax year to which the tax return refers.

How Much UK Income Tax Will I Pay?

You are usually entitled to tax free personal allowance of £12,570 (2024/25 figure) unless your income is more than £125,140 a year. If you are a non-UK resident you still won’t need to pay any tax on your taxable income until you are earning over £12,570, just make sure that you tick box 16 on form SA109.  

Remember, as soon as you earn over £1000, you still need to file with HMRC even if you will not need to pay any tax. 

Once you are earning over the personal allowance amount, you will pay tax on your profit.  Your profit is the amount that is left over after any allowable expenses have been deducted.   How much tax you pay will depend on which income tax your total taxable UK income falls into.  

Current Tax Rates:

The basic rate (20%) is payable on UK taxable income between £12,571 and £50,270. 

The higher rate (40%) is payable on yearly UK taxable income of between £50,271 to

£125,140.

The additional rate (45%) is payable on yearly UK taxable income over £125,140.

It is possible to reduce your tax bill by claiming tax reliefs and allowances. 

Paying Tax On Rental Income 

Again as with other UK taxable income, as long as you earn more than £1000 from renting out your property in the UK you still need to let HMRC know.  If this amount goes over the personal allowance (£12,570 a year in 2024/25)  then you may need to pay income tax.  Capital Gains Tax can also be payable if you made a “chargeable gain” (eg. you receive more than the amount that you paid for the land or property after selling it).  You’ll need to complete form SA105.

Once you are living outside of the UK for more than 6 months of a year then you will be classified by HMRC as a ‘non-resident landlord’.  After receiving the full amount of rent from your tenant(s), you will need to fill out form NRL1i, send it to HMRC and pay tax via self-assessment.   

It is also possible for any tax owed to be deducted by your letting agent or tenant who can pay it to HMRC.  They will need to deduct the basic rate of tax from the monthly rent (minus expenses if they are an agency) and give you a certificate at the end of the year showing the tax being deducted.  

You must keep accurate records of any rental income and allowable expenses because HMRC can ask for proof of the figures you report at any time.  Make sure that you keep your income and expenses record for at least 5 years after the filing deadline for each year.  

Our Experience Using GoSimpleTax

Using GoSimpleTax is a total no-brainer for our tax returns.  Their platform is extremely easy to use, allows us to record our income, our expenses and submit our tax returns in one go. 

If you ever I had any questions while using the system or felt unsure it was really quick and easy to get intouch with the support team who are always on hand with expert knowledge to help you with your needs.  Their blog is super helpful with great tips and advice for filing your returns For anyone who earns income outside of PAYE, GoSimpleTax is a great solution for non-residents who are self-employed, sole traders and freelancers so I highly recommend utilising their free trial.

Conclusion

Remember, don’t assume you’re exempt from paying UK tax just because you’ve moved overseas.  Understanding your tax obligations as a UK citizen living abroad is crucial to avoid penalties and ensure financial compliance. By carefully considering your residency status and double taxation agreements you can confidently navigate the tax maze and ensure that your tax affairs are in order.  I hope that this has been a helpful breakdown for you and please remember to consult a tax professional if you have any questions.  

Remember, this is not a substitute for professional tax advice. If you have any complex tax situations, always consult a qualified tax professional.