Understanding your tax liability when living abroad

Thursday, March 01, 2007

Understanding your tax liability when living abroad

The definition of residency and its particular area of law is very complex. It is therefore imperative to always seek professional advice as each case is looked at individually and can vary widely.

Only when a person has severed all links with the UK could they be deemed as not resident in the UK for tax purposes, even if that happened they would still be liable for UK taxation on all income arising from within the UK, including PAYE.

Liability to UK tax

The extent to which an individual is liable to UK tax will depend on whether he or she is:

  • resident
  • and/or ordinarily resident
  • and/or domiciled in the UK.

These terms are not defined in statute, and are in practice largely based on case law, mainly deriving from the 19th and early 20th centuries.


The amount of income and capital gains tax an individual has to pay will depend on whether he or she is resident in the United Kingdom: residents may be liable on their world-wide income and gains, whereas non-residents are liable only on income arising in the United Kingdom.

A person will be resident if he or she:

  • is present in the UK for 183 days or more in a tax year; or
  • comes to the UK intending to live here permanently or for at least three years; or
  • visits the UK regularly and after four tax years those visits average 91 days or more; orcomes to the UK for a purpose (e.g. employment) that will mean they remain here for at least two years (whether or not, in a particular year, they spend 183 days here); and usually lives in the UK and goes abroad for short periods, for example, on business trips.

Each case is treated on it's particular facts.

For more information, visit the HMRC website.


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