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UK Tax on Foreign Employment
Tax on Foreign Employment
Our tax experts handle UK tax on foreign employment, negotiating to optimise liabilities and ensure compliance. We provide tailored support to navigate regulations confidently and reduce your stress.
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UK Tax on Foreign Employment
UK residents representing a foreign employer (meeting clients, making introductions, etc.) must operate under a UK payroll. Despite being based abroad, your employer is treated as a UK employer by HMRC. You need to register with PAYE Online (DPNI scheme) and use payroll software to calculate and report Income Tax and National Insurance contributions (NICs) each payday. Calculate Class 1 NICs on earnings above the secondary threshold (currently £175 per week). Each pay period, submit a Full Payment Submission (FPS) to HMRC, detailing pay, tax, and NICs, and pay the collected amounts by the 22nd of the following month.
foreign employment when you are Non Resident
UK residents with foreign employment but no UK clients—those fully paid by overseas companies—must declare their foreign salary on a Self Assessment tax return, as their income is taxable in the UK. Tax treaties and the 183-day rule may reduce UK liability; spending fewer than 183 days abroad might allow you to avoid foreign tax. If you exceed 183 days, you may be deemed a non-resident, paying UK tax only on UK-sourced income. Always claim double taxation relief by showing foreign tax paid. Keep records of overseas days, pay slips, and foreign tax certificates to prevent unexpected liabilities and ensure compliance with employer PAYE duties and residence rules.
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Your Questions - Our Answers
We are here to help you with any questions you may have
Do I have to pay UK tax on my foreign salary if I live abroad?
If you’ve moved abroad for work, your UK tax position depends on your residency status under the UK Statutory Residence Test (SRT). If you’re non-resident, in most cases, you’ll only pay UK tax on UK-sourced income (like rental income or dividends from UK companies). Your foreign employment income is usually not taxed in the UK.
But if you’re still a UK resident, HMRC may expect you to declare and pay tax on your worldwide earnings, even if you never bring the money into the UK. For example, if you take a full-time job in Dubai but remain a UK resident, your Dubai salary could still fall under UK tax rules. The good news is that the UK has double tax treaties with many countries, designed to prevent you from being taxed twice. You may also qualify for the Overseas Workday Relief if you’re non-domiciled.
Don’t assume leaving the UK means leaving HMRC behind. Always check your residency status, keep track of your days in and out of the UK, and review tax treaty protections before payday surprises hit.
I’m a UK resident working for a foreign company. Do I pay UK tax?
Yes, if you are a UK tax resident, you normally pay UK tax on your worldwide income—that includes salary from foreign employers. Even if you’re paid overseas or in a foreign bank account, HMRC will still want a share. For example, say you live in London but work remotely for a US-based firm. Even though your employer is abroad, you’re still considered resident in the UK, so your income is taxable here.
If the country where your employer is based also taxes your income, you can usually claim Foreign Tax Credit Relief. This offsets tax already paid abroad against your UK tax bill. Some residents may also use the remittance basis if they’re non-domiciled. That means you only pay UK tax on foreign earnings if you bring the money into the UK. Being a UK resident means HMRC sees you as taxable on global income. But with reliefs and planning, you can avoid double taxation and keep more of what you earn.
I’m non-resident but working temporarily in the UK—what are my tax obligations?
If you’re a non-resident visiting the UK for work, you may still be taxed on the income earned while physically working in the UK. For instance, if you’re based in Germany but fly to the UK for a two-month project, your UK workdays could trigger a UK tax bill.
The exact treatment depends on:
- Length of your stay (short visits may be exempt).
- Who your employer is (UK vs overseas).
- Double tax treaties between the UK and your home country.
Some treaties allow short-term business visitor exemptions if you spend less than 183 days in the UK and your employer is non-UK. In that case, you’d only pay tax at home, not in the UK. Even a few weeks of work in the UK can create tax obligations. Always track your days and check treaty rules—business visitors often overlook this, and HMRC notices.
What is Overseas Workday Relief, and who qualifies?
Overseas Workday Relief (OWR) is a special tax break for people who are UK-resident but non-domiciled. It lets you avoid UK tax on foreign employment income, as long as:
- You work abroad for part of the tax year.
- Your salary is paid into an overseas bank account.
- You claim the remittance basis.
For example, a UK resident who spends six months working in Singapore may be able to exclude that Singapore salary from UK tax, provided it’s not brought into the UK.
OWR can save thousands in tax, but it only applies for the first three years of UK residence after returning or arriving. After that, HMRC expects full UK taxation of worldwide earnings. If you’re a newcomer or returnee with a foreign salary, OWR is one of the most powerful planning tools available. Get advice early—small mistakes (like using the wrong bank account) can cost you the relief.
What if I’m a UK expat—do I still need to file UK tax returns?
Many UK expats wrongly assume they can cut ties with HMRC just by moving abroad. But if you continue to earn UK income (like rental profits, dividends, or pensions), you may still need to file a UK Self-Assessment tax return. Even if all your income is foreign and you’re clearly non-resident, it’s often wise to complete a P85 form when leaving the UK. This notifies HMRC and helps settle your tax affairs.
If you return to the UK within a few years, you may fall into the “split year treatment,” where your tax year is divided into resident and non-resident parts.
Expat life doesn’t always mean a clean break. Keep HMRC in the loop to avoid penalties and ensure refunds aren’t left unclaimed.
Do business visitors pay UK tax on short assignments?
It depends. If an overseas employer sends you to the UK for a few weeks or months, your pay is usually taxable in your home country—unless you stay over 183 days or your employer has a UK presence.
Under most double tax treaties, business visitors are exempt from UK tax if:
- You stay under 183 days in 12 months.
- Your employer is not UK-based.
- A UK entity doesn’t pay your salary.
For example, an Indian IT consultant sent to London for 60 days remains taxed in India, not the UK. But if their employer has a UK branch paying them, HMRC may demand tax. Keep contracts and travel records—short assignments can be exempt, but only if structured properly.
I’m a remote worker abroad for a UK company—where do I pay tax?
If you’re living and working abroad for a UK company, your tax depends on where you’re resident. If you’ve become a non-resident, your salary may be taxed only in your host country, not the UK.
But if you’re still a UK resident, HMRC expects you to declare your salary even if you’re working from Bali or Dubai. In some cases, your presence abroad may also create a permanent establishment risk for your employer, triggering tax issues for them.
Remote work abroad isn’t just about Wi-Fi and visas—tax rules matter. Always check residency, treaty protection, and employer obligations.
What if I pay tax twice on the same foreign salary?
Double taxation is a common worry. Luckily, the UK has double tax treaties with over 130 countries. These usually ensure you don’t pay full tax in both places. If you’ve paid tax abroad on your salary, you can often claim Foreign Tax Credit Relief against your UK liability. Alternatively, the treaty may give exclusive taxing rights to one country.
For example, if you’re a resident in the UK but working in France, tax may be withheld in France. You’d then declare the income in the UK but offset the French tax already paid. Always keep payslips and foreign tax certificates. Claiming relief correctly can mean the difference between paying twice and paying once.