Leaving the UK to live abroad can significantly affect your tax obligations. It is important to inform HM Revenue and Customs (HMRC) of your leave Uk to ensure you are not paying tax unnecessarily and to avoid potential penalties. Here, we outline the key tax considerations when leaving the UK to live abroad, including how to notify HMRC, your tax responsibilities, and your options for National Insurance contributions and state benefits.
Is It Compulsory to Notify HMRC If I Leave UK?
No. It is not always mandatory to notify HMRC when leaving UK. Notifying HMRC or not depends upon how long you will be away. You do not need to tell HMRC if you’re leaving the UK for holidays or business trips.
However, you would need to notify HMRC if
- Leaving the UK to live abroad permanently
- Planning to work overseas for at least a full tax year.
Why do I need to inform HMRC that I am leaving UK?
You need to tell HMRC you're leaving the UK to update your tax residency status. This ensures you don’t pay tax on foreign income in the UK, prevents double taxation, and helps determine if you're due a tax refund. It also ensures the right tax is applied to any UK-based income, like pensions or rental income. Informing HMRC helps avoid penalties and keeps your National Insurance contributions in order, especially if you plan to claim UK benefits or pensions in the future.
How can you tell HMRC?
The process for this depends on whether you normally send a Self-Assessment tax return to HMRC or not. To inform HMRC when leaving the UK:
If you don’t usually complete a Self-Assessment tax return
Complete form P85 and include parts 2 and 3 of your P45 (if you have one). If you continue working for a UK employer while abroad, still you will need to submit form P85.
Form 85 is the form you complete to officially tell HMRC that you are leaving the UK used to let the UK and no longer plan to be a resident. This helps update your tax records and ensures you're no longer taxed as a UK resident if you're moving abroad.
For P85, please refer to, "Get your Income Tax right if you're leaving the UK (P85) - GOV.UK".
If you complete a Self-Assessment tax return
Update your residence status in form SA109.Note that this cannot be done online; you must submit the form by post. If working full-time for a UK employer abroad for a full tax year, also submit form P85 along with your Self-Assessment.
SA109 is an extra form used when filing your Self-Assessment tax return. It helps non-UK residents claim UK personal allowances and allows UK residents who are not originally from the UK to only pay tax on money they bring into the UK from abroad.
What If You Leave UK Partway Through the Year?
If your departure occurs partway through the tax year, you may qualify for split year treatment, meaning you will be treated as a resident for part of the tax year and as a non-resident for the remainder. This can have an impact on how your income is taxed.
What Next?
Once HMRC has been notified, they will assess your tax status and take the necessary steps to ensure you pay the correct amount of tax. Here’s what to expect:
- Tax Refunds: If HMRC determines you are entitled to a refund for the tax year you are leaving, they will arrange for this to be paid to you or to someone acting on your behalf (known as your 'nominee'). The refund is typically sent via cheque to an address in the UK and can be deposited into a UK bank account.
- Stopping Council Tax Payments: You should notify your local council to stop paying Council Tax if you are leaving the UK permanently.
Nonresidence Tax Status
Once you leave the UK, you may become a non-resident for tax purposes, meaning you do not pay UK tax on income or gains earned outside the UK. However, there are certain scenarios where you may still be liable for UK tax:
- UK Income: If you have UK-based income, such as rental income from property or earnings from a UK pension, you may still be subject to UK tax.
- Double Taxation Agreements: The UK has agreements with many countries to avoid double taxation. These agreements determine which country has the right to tax certain types of income, such as pensions or rental income. If you are taxed in both the UK and your new country of residence, you may be able to claim relief under the agreement.
National Insurance Contributions (NIC’s)
You may be able to continue paying National Insurance (NI) while living abroad, which is important for maintaining entitlement to benefits such as the UK State Pension.
Voluntary Contributions: If you plan to return to the UK or claim the UK State Pension later, you may want to pay voluntary National Insurance contributions while living abroad. The rules depend on the country you are moving to and whether it has a social security agreement with the UK. If the country you’re working in does not have a social security agreement with the UK, you may need to pay social security contributions there.
If the country you’re working in has a social security agreement with the UK, you’ll usually pay National Insurance in the UK. You may need to get a certificate showing you’re exempt from paying social security in the country you’re in.
No Refund on NICs: If you leave the UK permanently, you cannot claim back any National Insurance you have already paid. However, contributions made while you were a UK resident will count towards benefits in your new country of residence if it has a social security agreement with the UK.
What to do If Circumstances Changes?
If your circumstances change after you leave the UK—such as a change of address, marital status, or returning to live in the UK—you must inform HMRC.
Keeping your records up to date ensures you remain compliant with tax laws and can help with any future claims for benefits or refunds.
What Happens to My Tax Status If I Return to the UK for a Visit?
You can visit the UK without automatically becoming a resident again, depending on the purpose and length of your visit. You’ll normally be able to visit the UK for up to 90 days in a tax year, as long as no more than 30 of these are spent working. However, if you engage in new activities in the UK after leaving—such as starting a business or buying property—you may be considered a UK tax resident again. It is essential to check your residency status if you are uncertain about how your activities in the UK may affect your tax obligations.
If you decide to come back to the UK permanently, you’ll need to tell the other country’s tax authority to make sure you’ve paid enough tax there.
Conclusion
Leaving the UK to live abroad triggers important tax obligations and opportunities. By informing HMRC about your departure, you ensure that your tax status is updated and that you are not overpaying tax. Additionally, understanding your options for National Insurance contributions and staying informed about double taxation agreements can help you manage your tax liabilities while living abroad.
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