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International - Frequently Asked Questions

Contents

Q. Do I pay UK tax if I go abroad?

A. Yes, if you remain UK resident. If you are not UK resident, you pay UK tax only on UK income. The position depends also on the terms of any double taxation agreement in force. See HMRC booklet IR20, 'Residents and non-residents - liability to tax in the United Kingdom', chapters 2 and 9.

Q How do I know if I am a UK resident?

A. The rules are complex, and your position will depend on the facts. But the main rule is broadly that you are UK resident if you spend 183 days or more here in a tax year, or after four years your visits average 91 days or more over those years. You should consult a local HMRC tax office. See booklet IR20 , chapters 1, 2 and 3.

Q Do I pay UK tax if I receive any overseas income in the UK?

A. Yes, if you are UK resident. The position may, however, be affected if you are not UK domiciled, or not ordinarily resident in UK. It depends also on the terms of any double taxation agreement in force. You should consult a local HMRC tax office. See booklet IR20, chapters 5, 6 and 9.

Q Do I pay UK tax on my earnings if I come from abroad to work in the UK?

A. Normally yes. But, if you come for not more than 6 months, and are paid by a non-resident employer, you may be taxable on your earnings only in the other country, depending on the terms of any double taxation agreement in force. See booklet IR20, chapters 5 and 9.

Q Do I pay foreign tax if I receive overseas income?

A. This depends on the law in the particular country from which the income is received, and the terms of any double taxation agreement in force. See booklet IR20, chapter 9.

Q Can I elect which country to pay tax in?

A. No. Your tax position depends on your residence status, and the terms of any double taxation agreement in force. See booklet IR20, chapters 1, 2, 3 and 9.

Q What is a double taxation agreement?

A. A formal arrangement between the UK and another country, aiming to prevent or give relief for double taxation. 'Double Taxation' is where tax is charged by both the UK and the other country on the same income. See booklet IR20, chapter 9.

Q What happens if there is no double taxation agreement?

A. There may be relief under UK domestic law, where certain conditions are met. You should consult your local HMRC tax office.

Q Do I have to pay foreign social security contributions if I am sent to work abroad?

A. You may be able to continue paying UK contributions rather than foreign contributions if you work in an EU country or in a country with which the UK has a social security convention covering contributions. Other arrangements apply when working in countries outside the EU and where the UK does not have a social security convention covering contributions. Advice is available from the National Insurance Contributions Office, International Services, Longbenton, Newcastle upon Tyne NE98 1ZZ.

Q What is the tax position of a foreign company, sending an individual to sell products or services in the UK?

A. The foreign company will probably be trading in the UK and potentially liable to UK tax. Reference should be made to the relevant double taxation agreement to ascertain how taxing rights are allocated. You should therefore contact the local HMRC tax office in the area where the individual will be based.

Q We are a UK company operating in another country, which withholds tax from payments made to us; is this right?

A. It depends on the terms of any double taxation agreement in force. You should consult a local HMRC tax office.

Q Do I need to deduct full-rate UK tax when making royalty or loan interest payments to a recipient in a country where there is a double taxation agreement in force?

A. Yes, except that where a company has a reasonable belief that the non-resident is entitled, at the time the payment is made, to relief from UK tax on those royalties under a double tax treaty, it may pay the royalty gross, or at a reduced rate of deduction at source, in line with the terms of the relevant treaty.

In other cases, you must deduct tax until the overseas recipient has made a successful claim for relief under the double taxation agreement. For copies of claim forms consult HMRC Residency at PO Box 38, Ferrers House, Nottingham NG2 1BB (telephone 0845 070 0040 (+ 44 0151 210 2222 if calling from outside the UK)).

Q How do I get a repayment of foreign tax?

A. Whether a repayment is due from the other country may depend on the terms of any double taxation agreement in force. Your local HMRC tax office will be able to advise you.

Q As a non-resident, how do I get relief from UK tax under a double taxation agreement?

A. You should consult HMRC Residency at PO Box 46, Fitz Roy House, Nottingham NG2 1BD (telephone 0845 070 0040 (+ 44 0151 210 2222 if calling from outside the UK)).

Q I retired to another country, but the UK is still taxing my pension; is this right?

A. It will depend on whether you are UK resident, and on the terms of any double taxation agreement in force. If you are resident of a country with which the UK has a double taxation agreement, in most cases but not all, the pension is taxable only in the other country. You should consult HMRC Residency at PO Box 46, Fitz Roy House, Nottingham NG2 1BD (telephone 0845 070 0040 (+ 44 0151 210 2222 if calling from outside the UK)) who will arrange any repayment of UK tax. See booklet IR20, chapter 5. Pensions payable for government or local authority employment usually remain taxable in the UK.

Q Can I claim UK personal allowances, even if I am not UK resident?

A. This may be possible if you meet certain conditions - eg if you are a Commonwealth or European Economic Area citizen, or if you qualify under the terms of a double taxation agreement in force. See booklet IR20, chapter 7.

Q How do I get details of overseas exchange rates for use in tax computations?

A. From the HMRC, Compliance Division, Technical Co-ordination and Information Unit, at 22 Kingsway, London WC2B 6NR (telephone 020 7438 7700). They are also available on this website in the Rates and Allowances Section.

Q How can UK companies, claiming relief for 'underlying' tax on profits from which dividends are paid, get information leaflets and advice?

A. From the HMRC, International, Underlying Tax Group, at PO Box 46, Fitz Roy House, Nottingham NG2 1BD (telephone 0115 974 2033).

Q How do I get copies of double taxation agreements?

A. From The Stationery Office. Recent agreements are available from any branch, or by visiting the Office of Public Sector Information website. For older/out of print agreements, telephone 0870 600 5522. Alternatively most large public libraries should have bound volumes of the UK treaties.

Q How do I get a certificate of UK residence?

A. From the HMRC office which normally deals with your tax affairs. If you deal with more than one tax office, you need to go to the one to which you send your tax returns.

Q Where do I get forms to claim exemption or relief from other countries' taxes?

A. From HMRC Residency at PO Box 46, Fitz Roy House, Nottingham NG2 1BD (telephone 0845 070 0040 (+ 44 0151 210 2222 if calling from outside the UK)) has other countries' forms to claim relief under our double taxation agreements.